By: Deloise Holmes, Jr
When asking new and potential clients about Wills, regardless of their age, race, professional status, etc., this is, surprisingly, the most frequent response I receive.
The percentage of individuals lacking even the most rudimentary preparation in basic estate planning increases dramatically when discussing Wills and other critical documents that bring order to life’s inevitable conclusion. We all know we’re not going to live forever. Yet, despite the dawn of the information age and endless access to legal tools, expertise and advice, many people simply have not taken the time and responsibility to put their legal affairs in order.
I have a Will and other basic estate planning documents, because as a legal professional, I have seen, first hand, the distress and devastation the absence of these documents can bring. No one is really exempt from these potential problems. But just in case you think you are, here are some simple questions to ask yourself, to help determine whether or not you should be concerned:
- Am I married?
- Do I have any children?
- Do I own a home?
- Do I own a car?
- Do I have any bank accounts?
- Do I own any personal items (jewelry, guns, household furnishings, etc.)?
- Do I know who will handle my legal affairs if I become incapacitated?
- Do I know who will make medical decisions for me if I cannot?
- Do I know who will be my guardian if I become incapacitated?
- Are my medical records accessible by those who will need of them?
If you can honestly answer yes, to questions 1-10, then, perhaps, you should not be concerned, if your documents are up to date. However, if you answered no to question 7-10, if not concerned, you should at least give serious thought about what will happen to you, your family, or assets if you become incapacitated or not if, but when you die. The questions above, just like getting your affairs in order forces you to face your mortality.
Of course, most people do not want to this, and therefore, do nothing. By doing nothing, you leave decisions regarding yourself, your family, and your possessions to others. Will others make the same decisions regarding your affairs as you would make? Probably not.
There are six basic documents that if you have properly prepared and executed will allow you to either answer each of the questions above with a confident yes or at least know that decisions regarding your family and assets will be made based upon your instructions. Those documents are described below. As you read the description of the documents, think how having each one will allow you to answer each of the 10 questions – yes. Also, consider the peace of mind that you will have from knowing that your affairs and care will be handled according to your wishes.
The Basic Estate Planning Documents
Below are six documents that are important when planning for your future needs or those of a love one in the event of death or one becomes unable to make decisions for themselves. All these documents are essential to making sure your wishes are followed and your family is protected in the event of your incapacity or death.
Last Will and Testament
A will is a legal document by which you may direct how your property will be distributed when you die. In your will you can create trusts for the benefit or your spouse, children or a child with special needs and it also allows you to appoint a person to oversee the management and distribution of your assets, a person to become the guardian to care for your minor children and a person to manage any trust you create.
Statutory Durable Power of Attorney
A statutory durable power of attorney gives you the power to appoint someone as an agent to manage your finances if you are no longer capable of managing them yourself if you become temporarily or permanently disabled. Without a statutory durable power of attorney, if you become disabled a family member would have to seek a court-ordered guardianship to handle your affairs which is time-consuming and expensive.
Medical Power of Attorney
A medical power of attorney is a document that allows you to designate a person to make medical decisions for you in the event you become unconscious or you are mentally incapable of making those decisions for yourself.
Directive to Physicians
Directive to Physicians sometimes referred to as a “Living Wills” is a document designed to communicate your wishes whether you want to use artificial methods to extend your life in the event you have been diagnosed with a terminal or irreversible condition medical condition.
Health Insurance Portability and Accountability Act, HIPAA is a Federal law that sets rules and limits who can gain access to your medical records or receive health information. Because of this law, hospital and medical professions can face stiff penalties if they give out such information and as a result of such most are reluctant to do so. A HIPAA authorization signed by you allows the name individual access to your medical information.
Declaration of Guardianship
Is a document signed by you which designate the person you want to become your guardian in the event a court ordered guardianship proceeding is started.
For most people with typical assets these documents are can be prepared by a competent attorney who practices in the area of Wills and Estate Planning based upon providing minimal information. Of course, if your situation is more complicated due to the nature of your assets and relationships, a more thorough review may be required.
Many people are aware of a family member, friend, co-worker, etc. who had not taken the time to get their affairs in order and the chaos such a situation caused within a family already grieving the loss of a loved one. In addition, there will be higher legal fees and a more time consuming process to settle your affairs when proper documents do not exist.
Ask yourself those 10 questions again, should you be concerned or do you have your affairs in order?
Deloise Holmes, Jr. is both a Certified Public Accountant and Attorney with over 20 years of accounting and legal experience.