iIf you are unavailable due to injury or illness, do you have an estate plan to protect your spouse and your family? Unfortunately, many people have not taken the necessary steps to prepare for these issues, and do not know how to answer this question. Serious problems can result from an inadequate or incomplete estate plan, including frozen assets, inability to access financial or medical information, and unintended beneficiaries. These problems often have lasting financial and emotional consequences for your loved ones that far outweigh the cost of creating an estate plan.
Injury and illness can often lead to physical or mental incapacity. These limitations may render an individual homebound or otherwise physically unable to conduct necessary transactions. More extreme issues may include mental incapacity or severe physical limitations. Failure to provide for these circumstances can have major repercussions on the day-to-day management of a person’s affairs. For example, physical or mental capacity may render a person unable to take routine actions such as paying utility or insurance bills in a timely manner, placing the person’s assets in jeopardy.
Estate planning documents include mechanisms to deal with these problems. A Power of Attorney appoints an agent to manage a person’s financial and legal affairs in the event of his or her incapacity. The Power of Attorney helps to protect assets, or address legal issues, by appointing an agent to make these decisions for the principal. It is important that the Power of Attorney be drafted correctly so that the agent has authority to conduct necessary transactions in a timely manner and take legal actions as appropriate.
A Power of Attorney for Healthcare has a similar purpose, but a different scope. If the person is incapacitated, hospitals and medical providers will require a surrogate decision maker to exercise medical decision making authority. A Power of Attorney for Healthcare allows the principal to designate a healthcare agent, who is the person the principal deems best suited to make these types of decisions on the principal’s behalf. The Power of Attorney for Healthcare protects the principal by enabling the agent to take timely action to authorize important decisions including the type of treatment, choice of medical staff, and pain management.
Lastly, a Will is necessary to manage and distribute a person’s assets after they pass. This includes the assets of the estate passing to each beneficiary, and the designation of appropriate executors and other fiduciaries such as trustees or guardians for minors. A Will provides a basic level of protection to your spouse and loved ones and avoids unnecessary expenses for your Estate. It also allows you to designate your beneficiaries and the terms each beneficiary will receive his or her assets. In some instances more sophisticated estate planning documents, including trusts, are needed to accomplish your overall goals.
A Will, Power of Attorney and Healthcare Power of Attorney provide a basic level of protection in the event of an unexpected illness or injury. The failure to implement these documents can have a profound adverse effect on you and your family by delaying important decisions and incurring unnecessary costs. If you lack these documents it is important to implement them as soon as possible to avoid potential problems in the management of your affairs and your estate.
