Estate Planning Is Vital for All, Regardless of Asset Level

October 15, 2019

By: Olivia R. Holcombe-Volke, J.D. – Partner

Estate Planning Is Vital for All, Regardless of Asset Level

Are you over the age of 18? Is your autonomy important to you – your ability to make decisions for yourself? If you ever lost that ability – ever lost the mental capacity – to make decisions for yourself, is it important to you that you personally select the person (or people) who are empowered to make decisions for you? And to specifically and personally choose what decisions they are authorized to make for you, and how – that is, the specific parameters of their authority to act on your behalf?
I have yet to ask these questions of an autonomous adult and hear any answer other than “yes.” While we may not always want to make the truly important decisions – like what to eat for dinner on a Tuesday – the reality is that when it comes to health and finances, we all want to decide such things for ourselves. And, while it may not be at the top of your mind while you are mentally capable of making such decisions (and busy doing so – busy with life!) – this also means that, if you are ever mentally incapable of making such decisions, you absolutely, unequivocally, want the person and specific decision making authority to have been chosen and specified by you.
Luckily, the law allows you to do so, by signing two, fairly straightforward but immensely powerful, documents: an Advance Directive (sometimes known as a Healthcare Power of Attorney), and a Financial Power of Attorney.

An Advance Directive allows you to name an authorized person as your Agent (as well as any successor/backup Agents – as many as you want), to speak on your behalf to the doctors and other healthcare professionals, and to make healthcare decisions for you. This vital document also allows you to specifically outline and direct your Agent regarding what decisions you want made in certain end-of-life situations, as well as your organ donation preferences, and instructions regarding your final funeral/burial/cremation/memorial service arrangements.

A Financial Power of Attorney allows you to name an authorized person as your Attorney-in-Fact (as well as any successor/backup Attorneys-in-Fact – as many as you want), to access, manage, and use your assets on your behalf (to take care of you and your needs). This vital document also allows you to specifically outline and direct your Attorney-in-Fact regarding what decisions you want made regarding specific assets, and to authorize (or not) the use of certain asset protection strategies in the event you ever need Medicaid or other needs-based government benefits to pay for your care.

What happens if you become mentally incapacitated and you do not have these vital documents in place? Quite simply, the court must get involved. If it is determined by physicians that you are not mentally capable of making decisions for yourself, and you do not have an Advance Directive (for healthcare) and Financial Power of Attorney (for finances) in place, then the court appoints a guardian of your person (for healthcare) and of your property (for finances) to make all such decisions for you, all to be supervised and overseen by the court. This guardian may be known to you, or may be a complete stranger (often, an attorney) – it is entirely left to the discretion of the court, depending on various factors. This – adult guardianship – can be expensive (the court, the lawyers involved, and the court-appointed guardian do not work for free), embarrassing (no independent and autonomous adult likes the idea that there might ever be an open courtroom in which their mental inability and the decisions that are made for them are aired to the public), and can result in decisions and actions that may not be the decisions or actions that the once autonomous adult would have wanted.

Notice that I haven’t even mentioned the “what happens to my stuff when I die?” aspect of estate planning – often the only aspect of which most people think or are aware. This is because the other aspect of estate planning – the “what happens to me and my stuff if I am still alive, but mentally incapable of managing and deciding health and financial issues for myself?” – is, when most people are asked, often considered equally if not more important, and is certainly more widely applicable. While it may be true that some adults feel they do not have enough “stuff” to worry about distributing after death, and therefore do not feel the need nor worry about having a Last Will and Testament in place – all autonomous adults can agree that they absolutely want to control what happens to them and their “stuff” while they are still alive.

Not to diminish the importance of having a Last Will and Testament, which, of course, allows you to dictate where or to whom your estate will go at your death, and by whom it will be handled. And certainly, for parents of minor children (that is, children below the age of 18), a Will should absolutely be in place to name the parents’ preferred guardian of the minor children(that is, who will be legally responsible for the minor children until they become 18, in the event that both parents die).

A common misconception that leads many people to believe they do not need these vital documents is the idea that if they are married, their spouse will be authorized to handle all decisions for them, and be able to access all assets (before and after death). This simply is not true. Even if you are married, you must have an Advance Directive and Financial Power of Attorney in place to ensure that anyone, including your spouse, has the authority to act on your behalf while you are alive, and, at a minimum, a Last Will and Testament in place to ensure that your desired distribution of your “stuff” will take place at your death, whether that desired distribution is to your spouse or otherwise.
This is not to say that an Advance Directive, Financial Power of Attorney, and Last Will and Testament are the be-all and end-all for everyone. There may well be the need and desire for additional or alternative estate planning strategies, such as Revocable Living Trust or Special Needs Trust-planning. But, at a minimum, every autonomous adult should have these three essential documents in place.

Chances are, you or someone you know is over the age of 18, and has not implemented these vital estate planning documents. Encourage that person to contact us as soon as possible. There is no crystal ball that will allow us to see into the future. But having a plan in place for the unknown will allow us to fully enjoy the present.