It is imperative that every American has an estate plan in place if they wish to protect themselves and their loved ones. Making sound decisions regarding finances and healthcare can become challenging as you age due to diminished mental capacity or declining health. Putting these five must-have legal documents in place before life becomes too difficult to handle is crucial for your protection and wishes. It is not legally permissible for you to create these documents if you are too far into ill health, and guardianship will become necessary for decision-making on your behalf. Retaining a trusted elder law attorney is the first step to setting these legal guidelines to carry out your wishes.
Last Will and Testament
The will is a legal document that outlines who receives your assets after death. A valid will is critical for adults to possess regardless of age. It is especially true if you have dependent children since your will identifies guardians for them. Without a will, the courts decide who is responsible for raising your children and what happens to your assets. Each state has statutes that prescribe the formalities to observe in making a valid will. Writing, signature, witnesses, acknowledgment, and attestation may vary slightly depending on where you live.
a Revocable Trust allows the grantor to amend, add assets to, or terminate the trust for as long as they like or until they can’t manage the trust competently. The grantor names a trustee who will eventually make daily decisions regarding certain assets on behalf of the trust and transfers these assets to beneficiaries upon the grantor’s death. Assets in the trust pass outside of a will and outside of probate. A revocable trust can make a potential guardianship process unnecessary.
A revocable trust is an estate planning tool used to reduce probate fees and delays in asset distribution and protect assets from becoming a matter of public record. You don’t need to have significant assets to benefit from this trust. You can place your home, checking account, life insurance policies, jewelry, or other valuable assets into your trust. We can design your revocable trust to reduce federal estate taxes. A revocable living trust is one of the most important documents for nearly anyone to have in their estate plan.
An Irrevocable Trust allows assets in the trust pass outside of a will and outside of probate. It also allows assets to be preserved from Medicaid recovery. These can be very useful trusts under certain circumstances, but they come with some restrictions. You should fully vet out with an estate attorney the advantages and disadvantages of this trust for your particular situation.
This document permits the legal transfer of authority to make medical decisions on your behalf. The designee, known as the agent, can determine what medical procedures are allowable on the principal’s behalf in the event of incapacitation. This document differs from a medical directive that only explains your health care wishes. A Healthcare Proxy, assigns decision-making power to your agent to act on your behalf when you are no longer capable.
The combination of a Healthcare Proxy and Living Will assures you will receive the care you desire or pass a natural death. The Health Care Proxy gives the legal authority to your agent to effect decisions based on your wishes. The Living Will serves as legal authority to allow the medical field to allow you to pass naturally.
This document, also known as an Advanced Directive, can be a comprehensive and specific document outlining the wishes of a person’s healthcare choices in anticipation of incapacitation, illness, or end-of-life care. Some individuals want medically heroic measures to remain alive, while others might opt for a peaceful passing and less invasive care. For example, if you want artificial support to breathe or eat via a ventilator or feeding tube, that is an individual choice. A medical directive allows you to state these types of choices. But if you wish to pass naturally, the Living Will satisfies the requirement to allow the doctors to withhold life sustaining treatment, even if you cannot direct your own care.
Most often, individuals prefer to weigh the benefits of medical intervention as it affects their quality of life. One can be alive yet hardly “living.” A medical directive provides clarity and guidance in decision-making for medical teams and family members regarding your ill health, incapacitation, and end-of-life choices for care.
Depending on how the document is written, this designated agent can make many financial decisions for the principal. They may include overall financial affairs, bill pay, property sale, bank safe deposit boxes, contract for services, property rental, tax audits, and more. There are four basic types of power of attorney around the country, but for elder law practices here in New York, the Durable Power of Attorney is most common:
- Limited– This power of attorney type is narrow or limited in scope. An agent may act on your behalf for a specific purpose, such as signing a property deed in your name while you are out of town. Usually, a date will terminate the agent’s power, or it is contingent upon completing the outlined task.
- General– This is a comprehensive power giving your attorney-in-fact all rights and authority you have. A general power of attorney may sign documents, pay your bills, and conduct financial transactions on your behalf. People with complex business affairs and hectic travel schedules often use a power of attorney for conducting financial matters. This agent’s legal designation and power will end upon your death or incapacitation unless you rescind it before that time.
- Durable – This power of attorney type can be limited in scope or general but will remain in effect after your incapacitation. Absent a durable power of attorney; if you become incapacitated, there is no legal representation to act on your behalf unless a court appoints a guardian or conservator. A durable power of attorney will remain in effect, managing your financial affairs until your death or choice to rescind it while mentally sound.
- Springing – Much like a durable power of attorney, a springing power of attorney can act as your attorney-in-fact, but this only becomes effective when you become incapacitated. If you choose to employ this power of attorney type, it is critical to determine the standard that identifies your incapacity. This identifying trigger that enables power of attorney must be clearly written in the document.
Before making a selection, it is important to understand the different types of power of attorney and which will be most effective for your situation. Your attorney-in-fact will control your finances, so the agent you select must be someone you trust implicitly. If you do not have a viable candidate for a financial power of attorney, you may consider using your attorney or a licensed fiduciary company.
Speak with your lawyer today to implement these five critical documents in your estate plan. An unexpected adverse health event can happen anytime and at any age. These legal documents will protect your wishes, well-being, and assets at a time when you and your family are at the most vulnerable. We hope you found this article helpful. Please contact us today at (631) 686-6500 to schedule a consultation to discuss your legal matters.