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Preparing for the Inevitable

Death is inevitable – there is nothing profound about that statement.  We all know that.  But death is something many of us don’t like to talk about or think about and because of this denial we often don’t prepare for the inevitable – spiritually or legally.  I can’t speak to the spiritual preparations but I can speak to legal preparations.  There are certain legal documents that address the inevitability of death or near death that are a must have.  These legal documents should be a part of an overall estate plan but a very simple and basic estate plan may be sufficient if the plan includes a will, powers of attorney and a living will.

Estate planning is a process that involves professionals such as attorneys, financial planners and accountants.  Estate planning covers the transfer of assets upon our death as well as some other personal matters such as planning for any potential mental incapacity.  Estate planning may or may not include tax planning.  Estate planning is not just for rich people.

I am saving a discussion about estate planning for another day.  Instead, I want to discuss the importance of having at a minimum a will, powers of attorney and a living will.  These documents are the foundation of a sound estate plan and you don’t need hundreds of thousands of dollars in assets to have them.

The following is not a gratuitous plug for my former profession but I would highly recommend hiring an attorney with experience drafting these documents.  Each state has very particular laws that govern the drafting of these documents and there are certain formalities that must be followed in order to be valid legal documents such as having at least two people witness the signing of a will.  There are attorneys that will draft these documents for a flat fee or a fee based on the percentage of the value of assets owned by a client.  Just ask the attorney.

A will is a (typically) written document that tells the world how you want to distribute the property you own at your death.  The will should allow you to appoint an “executor”.  An executor would be responsible to manage your estate or assets according to your will.  If you have minor children, the will allows you to appoint a guardian for your minor children.  A will allows you to clearly state your intentions on how you want your property and family to be taken care of in the event of your death.

Generally, “Power of Attorney” is a document that allows you to appoint an “attorney in fact” or agent to act on your behalf for certain purposes such as signing documents for you.  But in the context of estate planning powers of attorney can be used to appoint an attorney in fact or agent in the event that you cannot take care of your personal affairs such as health care or personal finance decisions.  Typically, these powers of attorney would become effective if you are considered “legally incompetent”.

The title, document form and authority of powers of attorney may be different between states and again that is why it is important to hire an attorney to draft these documents.  The two powers of attorney that I am familiar with are “Power of Attorney for Property” and “Power of Attorney for Health Care” (sometimes called a health care proxy).  The title of the documents tells you that they serve two different purposes.  Power of Attorney for Property appoints an “attorney in fact” or agent to manage on your behalf things such as checking accounts or purchase and sale of stocks, bonds and real estate.  Power of Attorney for Health Care appoints an “attorney in fact” or agent to make health care decisions on your behalf and it allows you to state whether you want “life sustaining” treatment or not in the event that you are terminally ill or injured.

A living will is a document that allows you to express in writing how you want to be treated in certain medical conditions – typically in the events of terminally illness or serious life-threatening injuries.  A living will is very limited in scope.  It applies to life-threatening situations.

A “Power of Attorney for Health Care” or health care proxy can include the written directions of a living will but as a practical matter having both a living will and “Power of Attorney for Health Care” or health care proxy and are consistent with one another may be a good choice.  My experience has been that some hospitals may not be familiar with health care proxies and refuse to accept them initially while a living will is more widely accepted.  If you have both documents then you can possible avoid any complications to a very stressful situation.

If you don’t have a will then state law and a probate court judge will determine how your assets will be distributed and who will take care of your minor children.  The decisions based on state law or by a probate court judge may not be what you wanted but it would be too late to do anything – you are dead.  The absence of powers of attorney can cause family disharmony, confusion and delays when expediency is required.

Death is a very difficult topic to talk about. The thought of leaving love ones from our current form is not pleasing.  But it will happen and it is best to be prepared for it.  I would like peace of mind on my death bed or be a happy spirit in the after life knowing that my family will be taken care the way I thought best.  The only way to ensure that our intentions are followed upon our death is by formalizing them in writing in the form of a will, powers of attorney and a living will.

Rich “Gunny” Gunnar - RIP

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