Protect yourself and your loved ones with these three key legal documents
Ask yourself if you would like the courts to decide how to spend your money, if you want the hospital to decide on your final days, or if you want the government to decide who gets any inheritance you may leave behind. Most of us don't want institutions controlling our circumstances. Neither do your aging relatives.
Lack of preparation can lead to loss of control of assets and of life decisions. Three legal documents can ensure that the wishes made when healthy will be followed when health and clear mind is taken away by sickness or by age.
The three documents are the Power of Attorney, the Will or Living Trust, and the Living Will or Health Care Proxy. Although these documents may go by varying names, each serves a specific purpose. These are all very serious documents and should be prepared utilizing an attorney. We do not recommend "Do It Yourself" kits for these items. Particular circumstances may involve alternate legal arrangements. Laws can vary between states.
Power of Attorney
The power of attorney delegates the right to make the monetary and property transactions specified therein. Power of attorney may be general assigning power to deal with all assets and to take all necessary action, or special allowing only specific acts or control of specific property. If the power of attorney is to remain in effect during periods of incapacity, it must be a durable power of attorney. If the power of attorney is not durable, it can be come invalid during incapacity. The power of attorney is in effect only during life. Death ends the power of attorney.
Interestingly enough, state law may not require third parties to honor the power of attorney. Some institutions such as banks may have their own forms and be reluctant to accept any others. Often the sale of a home will involve a special power of attorney specific to that transaction even if another authorizing power of attorney exists. Prior awareness of these variants can aid in preparation.
It is vitally important that the power of attorney be given only to a trusted party, or if none are available, to a reputable institution that can be held financially responsible for fiduciary decisions.
Without the power of attorney, or another legal document providing you with similar rights, all necessary expenditures of an aging relatives assets, sale of property, and the like can involve time-consuming and possibly expensive legal processes. With the power of attorney, you will be able to write checks, sell properties, and otherwise manage your relatives affairs with relative ease.
The Will or Living Trust
The will specifically defines how your assets are to be distributed after death. A living trust may be broader in scope addressing other life events such as disability. A living trust is sometimes used as an alternative to a will. Without specific legal instructions as to the handling of your estate, it will be disbursed in accordance with law. This may not result in your assets going where you would have wanted.
There is great debate and great hype about the will versus the living trust. There are advantages and disadvantages to each. The correct choice depends on your particular circumstances. Again, consult an attorney to determine the appropriate course of action and be wary of those who present the living trust as the only correct answer for all circumstances.
A properly drafted will or trust can result in emotional benefits and monetary savings for those family members faced with the passing of a loved one.
The Living Will or Health Care Proxy
Imagine that you are terminally ill, unable to speak for yourself, and then catch pneumonia. Should antibiotics be given to you to extend your life? If you stop breathing, should oxygen be artificially pumped into your lungs? If your heart stops, should it be jolted into restarting. If you haven't specified what you want done, is there someone in particular you would want to make these decisions for you? These kinds of difficult decisions can be made in advance in a living will or health care proxy.
Of the three vital documents, this one is generally the most difficult to address because it brings to light that death is often the end of a process. Most do not enjoy discussing the possibilities that may be brought by modern medicine to a human being in their final days. Should directions be made in advance, or would you rather leave all the decisions to the doctors? In the absence of prior written directives from the patient, the doctor will prolong life even if it is painful and hopeless to do so. Consider that a doctor could be taking much personal legal risk by failing to administer life prolonging treatment even with a terminally ill and unresponsive patient.
State statutes vary. To be effective, these documents may need to be specific to the state involved. Again, consult an attorney. A poorly constructed document can be as bad as a lack of a document. Either case can result in great and unnecessary expenditure of emotional and financial energy.
It's Not Easy to Talk to Mom or Dad or Aunt Sally about this Stuff
People have usually heard of these three documents in one form or another. Why do so many not have them in place? Here are some common barriers:
There is no immediate urgency. Everyone's OK right now.
The simplest answer to this is that if you need it suddenly, it may then be too late to get it. Putting this off doesn't make it go away.
I don't like to deal with lawyers unless I have to.
Would you rather deal with a lawyer in a cooperative joint effort to prepare for the future, or in an adversarial role to determine who gets the assets, or what health care decision is to be made? Preparation is a positive legal interaction. Reactive situations often involve negative elements.
My relative doesn't understand finances.
All the more reason to get such documents in place. Or you can wait to discover that Aunt Sally hasn't paid income taxes for the last four years because she thought that once you were over eighty you didn't have to pay anymore.
Today's not a good time to talk about this.
These discussions require consideration of our human frailties. Therefore, the subject is always uncomfortable. This is especially true with a beloved relative or parent. These documents are important. They can avoid unnecessary pain and suffering for you and for your relative. Would you rather talk to Mom about health decisions and dying when she's healthy, or when she's pretty sick. If it were you, when would you rather hear about it?
How can I talk to my parents about their illness or death?
Unfortunately, we will all sooner or later face our maker. Your discussion and the resulting decisions can remove some of the uncertainties. Your relative is aware of their aging even if you or I don't like to mention it. There is reassurance in knowing that preparations are in place.
Dad will take care of Mom, or vice versa
This can be a plan. But does he have the legal right and the capacity to do it. Even if the capacity is there, the legal right may not be. One option would be to set up the legal documents with Dad as the first line of defense for Mom, and Mom as the first line of defense for Dad.
Shouldn't I set up these documents for myself as well?
Of course you should. It provides protection for you and your family from unnecessary emotional and financial expense.
The documents discussed represent three areas:
The right to act for another in matters involving money;
The specification of the distribution of property upon death; and
The right to make final health care decisions for another.
It is important to involve a lawyer. These areas need to be handled by the proper legal vehicle for specific circumstances and need to be properly prepared.
Although a difficult subject to discuss with aging relatives, the net result can be reduced worry knowing that preparations are in place, and emotional and financial savings for the family including the aging relative. And while you're doing it, do it for yourself as well.
Remember, it is very easy to put off this type of preparation until it is too late.
The above information should not be used as legal advice. Individual circumstances vary. The law provides many variations and options. Consult an attorney for important decisions regarding the topics discussed above.
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