Estate Planning for Incapacity and Death
Power of Attorney
Power of Attorney documents allow someone to act on your behalf for financial and property related transactions.
Advanced directives dictate what medical treatment you want or allow someone to decide on your behalf if you become incapacitated.
What is Estate Planning and Why It Is Needed
Estate planning is the preparation of your affairs and assets in case something happens to you, such as incapacity or death. If you become incapacitated, even temporarily, will your finances be taken care of? How can your bills and expenses get paid? What medical procedures would you want or not want if you are in the hospital? How will your children or spouse be taken care of when you die? With proper estate planning these decisions can be made for you and your finances can easily be managed by someone you trust.
You are never too young or too old to plan for unforeseen circumstances. Proper estate planning ensures you or your loved ones can avoid difficult decisions and possibly costly and lengthy legal alternatives such as guardianship or will probate and administration.
The Problem: You Become Incapacitated
Incapacity means someone cannot manage or take of their own affairs, property or personal needs due to a mental deficiency or illness. There isn't a time requirement or severity. Incapacity can be something as brief as being in a car accident with head trauma and confusion or it can something more serious and long lasting such as a coma or neurodegenerative disease. What matters is not being able to make a decision for oneself.
If someone can't make a decision for themself, then someone will have to make a decision for them. If there is no one to make decisions, then a court will appoint a guardian through a guardianship proceeding, which involves filing a petition and going to court. This is costly, complicated, lengthy and expensive. If a decision has to be made in a time is of the essence manner, guardianship will not work.
The Solution: Power of Attorney, Living Will and Healthcare Proxy
Estate Planning involves creating compliant and effective power of attorney, living will and healthcare proxy documents. Proper drafting of these documents by a qualified estate planning attorney is highly recommended.
Power of Attorney gives someone, your agent or attorney in fact, the ability to make financial decisions or transactions on your behalf without the intervention of a court or anyone else. Your agent can sell property, including real estate or automobiles, withdraw money from accounts, or gift money to people. Because of the broad scope and authority, a power of attorney gives your agent, it is important your agent is someone you trust and who is competent.
Most states have a form power of attorney for use by the public. New Jersey's version can be found here, and New York's version can be found here. While it is good to have free resources, these documents are best left for an attorney to review and draft.
Living Wills and Healthcare Proxy ensure you receive the care and treatment you want or don't want. A living will is a standalone document that clearly states what you want to happen in a medical setting if you are unable to communicate. If you are in the hospital without your living will, then the medical team will not know what to do. In this scenario, a healthcare proxy would benefit.
A healthcare proxy is similar to a power of attorney except a healthcare proxy covers only medical decisions. If you can't communicate and your living will is unavailable, your healthcare proxy can step and make decisions for you. Similar to a power of attorney, you want your proxy to be someone you trust is competent, but also able to make difficult, even life ending decisions.
Similar to the power of attorney provided by various states, some states have form healthcare proxies. New Jersey's can be found here and New York's can be found here. These are helpful if you are going in for surgery or a procedure, but long term planning should be performed by a knowledgeable estate planning attorney.
Last Will and Testament
Usually when someone thinks of estate planning, they think of a Will, or more formally A Last Will and Testament. We've all seen movies with family members sitting in the lawyer's office waiting to see what they got from their dead rich uncle's will. In reality the process and is much more mundane. Wills do direct someone's property and possessions to their heirs once they die, but they can do much more such as setting up different types of trusts and appointing a guardian for a child.
Recently, online legal services began providing canned wills for a small fee. While this seems great for a simple will, even simple wills can cause unwanted events such as taxable events or public benefit disqualification. This is why it is important to have an attorney specializing in estate planning taking care of your estate planning needs.