While reported instances of the COVID-19 continuing to rise, the CDC and other government agencies have recommended isolation, personal distance, and other protective measures to halt the spread. Fortunately, with the public largely following these recommendations it appears to be having an impact. (Unfortunately, there are also negative effects of people hoarding essentials like toilet paper. See my father’s explanation as a doctor on why people are hoarding toilet paper by clicking here.)
With many families isolated at home, thoughts of worse case scenarios have pushed many people to think more seriously about their estate plans. While many of our clients choose to use a revocable living trust as the way to handle their wishes while avoiding the probate court system, here are what we call the five basic planning documents:
- Last Will and Testament: The Last Will and Testament is the main document in a Will-based plan, and it is the legal document most people think about when discussing estate planning. While it is an effective tool for directing what happens to your assets after you pass on, it is not necessarily the best way to determine how your assets get to the proper beneficiaries. In the end, a Will governs your assets that go through the probate court process, and many of our clients wish to avoid that process.
- Durable General Power of Attorney: This document empowers your appointed “agent” to handle financial transactions for all accounts in your personal name as well as dealing with government agencies, applying for benefits, and even signing tax returns. This authority ends when the person dies. For more information on why a power of attorney ends upon death, please read our previous blog by clicking here.
- Health Care Power of Attorney: While a Durable General Power of Attorney can handle your assets, the people you choose to handle finances may not be the same people you would want to make health care decisions for you. After all, the two functions require different skill sets, attitudes, and knowledge. For couples, they generally want each other to make health decisions first and then will each list a succession of individuals who are in charge in the event of a medical crisis rather than relying on the state statutes to determine what person or group of people are in charge of your medical decisions. Very few of our clients want ALL of their children or ALL of their siblings trying to agree on every medical decision that needs to be made.
- Living Will: Also called a “Declaration of a Desire for a Natural Death,” this is a very specific document related to the end of life decision of whether or not to withhold life support and artificial nutrition and hydration if there is no hope of recovery. The specific conditions we draft into the documents is that two attending physicians (doctors who have actually examined you) agree that you are either in a persistent vegetative state or are terminal and incurable before taking action. In non-medical terms, the doctors don’t believe there is anything they can do for you, and keeping you on life support and nutrition/hydration is only prolonging the inevitable. The main benefits of having this document are 1) that your wishes in this matter are given legal effect, and 2) no one has to actually give the order to withhold treatment because you have already done so in writing.
- Nomination of Conservator: In terms of health care, the Health Care Power of Attorney and Living Will should be all that is needed in an extreme medical crisis. The Financial Power of Attorney (and the Revocable Living Trust if you have it) should be all that is needed to take care of your finances in an extreme medical crisis. But sometimes there are relatives or friends who think they know better than the people you have appointed to make these decisions, and so they try to get “guardianship” or “conservatorship” over you.
As many of us are holed up with our family members and having time to think, it might be a good time to review these basics. If you would like more information on these documents and the revocable living trust, please download my free ebook Estate Planning Basics at www.raleightrusts.com/free.