As we all adjust and adapt to a world with coronavirus, I wanted to check-in and let you know some of the issues that we are encountering. Today that is about Healthcare Directives.
First, my friends and associates in healthcare in Cape Girardeau and Poplar Bluff tell me that although they we haven’t seen many coronavirus cases yet, just wait. They think the wave is coming. Now that is just their opinion, but it is worth considering that I’ve had multiple physicians recently contact my office regarding getting their estate planning in order. Their reason – they believe it is only a question of “when” they will get coronavirus, not “if.”
My understanding of coronavirus is that most cases are mild. Some individuals have the virus and don’t even know it because they are asymptomatic. Yet, for the 10-20% of cases that require hospitalization, it is important for individuals to have a Healthcare Directive. A healthcare directive does just what its name suggests – directs what type of healthcare decisions you want made. The key here is that it puts you in control of your healthcare decisions.
Several clients have shared with me their personal experience with how helpful a healthcare directive can be during one of life’s most challenging times.
In the event that your health reaches a point where you are not able to make your own decisions, on top of all of the other emotions your spouse, children, or other loved ones will feel, they will feel a tremendous weight on their shoulders as they make healthcare decisions, sometimes literally life and death decisions, for you.
How much easier it is for your loved ones when you’ve put your decisions in writing! No guess work required. It is written in black and white.
Creating a healthcare directive takes the weight of your spouse or loved one’s shoulders. You decide what type of care it is that you want, freeing your spouse, children, or other loved ones from that burden.
*Healthcare Directives are also called Medical Directives or Living Wills. Healthcare Directives are often included as part of a Durable Power of Attorney for Healthcare.
I’m a note-taker. Usually you will find me with a blue ink pen and legal pad in hand, ready to take notes on whatever is being discussed. Recently, I came across one of my legal pads that had the following notes: Top 10 Reasons for Creating an Estate Plan from “The Everything Wills & Estate Planning Book” by Deborah S. Layton. I like the list because she outlines some of the major benefits of estate planning in layman’s terms.
- A sound estate plan can save your family thousands of dollars in taxes and legal fees.
- If you don’t have a plan, the government will decide who will receive your property.
- If you don’t have a plan, your spouse or partner may not receive the property you intended to provide.
- Most people can avoid or reduce estate taxes with the right plan.
- Naming a legal guardian in your will is the way to choose who will raise your minor children if you are gone.
- Creating a durable power of attorney ensures that someone can pay your bills and sign legal documents if you become disabled.
- Have a medical directive will provide guidance about your health care wishes in the even you become incapacitated.
- You can avoid the unexpected results of owning property in joint name when you understand the rules.
- You can make gifts to your favorite charity to reduce estate taxes but still provide for your family.
- A good estate plan can preserve your assets for your children’s use and prevent them from wasting those assets.
We are happy to work with your financial advisor. In fact, comprehensive estate planning often requires that we work with your financial advisor, accountant, and insurance professional. One local financial advisor breaks down wealth management into 13 parts. We are actively involved or responsible for 8 of the 13 parts (as shown by the *). The 13 parts are:
- Qualified retirement plans / IRA plans
- Corporate executive stock options
- Business succession planning *
- Durable power of attorney *
- Gifting to children and descendants *
- Charitable gifting during life *
- Titling of assets *
- Executor/successor trustee issues *
- Distribution plan to spouse/beneficiaries at death *
- Charitable inclinations at death *
Financial planning and estate planning go hand-in-hand. You need both.
While we do not give investment advice, we often encourage clients to contact a trusted financial advisor. For example, many clients have money invested in CDs at their bank (Certificate of Deposits) earning very little. Many financial advisors can find a safe investment that doesn’t earn a lot, but earns 2 to 3 times what the client’s CD at the bank earns.
That’s part of our difference. As estate planning professionals we handle powers of attorney, wills, and trust issues. Then we work with your existing financial advisor, accountant, or insurance professional to help you are get the most from those relationships as well.
A Power of Attorney is a legal document that allows one individual to act on another’s behalf. The person granting the powers is called the principal. The person authorized to act on the principal’s behalf is called the agent or attorney in fact.
The Power of Attorney document spells out the powers that you are giving to your agent. If your agent acts within the authority granted to him or her in the Power of Attorney, those actions are legally binding on you. I’ll repeat that again in slightly different words, as it is critically important to understand. Your agent’s actions, so long as they are authorized by the power of attorney document, are legally binding on you. For this reason, before signing a Power of Attorney you should do 2 things:
- Ensure you understand what powers you are granting your agent. Are they broad or narrow? Does your Power of Attorney allow them to sell real estate? Access your bank accounts? Access your digital accounts including your personal e-mail?
- Ensure that you trust your agent. If you don’t trust them, the answer is simple, don’t make them your agent.
What does it mean for a power of attorney to be “durable”?
The agent’s authority under an ordinary power of attorney only exists so long as the principal is of clear mind. If the principal becomes incapacitated, the agent’s authority ends.
Clients often trust family members to continue to act for them even if they are disabled. As such, Missouri law allows individuals to sign a durable power of attorney. Under a durable power of attorney, the agent’s authority continues whether the principal is of clear mind or incapacitated. The durable power of attorney should include the following language:
THIS IS A DURABLE POWER OF ATTORNEY AND THE AUTHORITY OF MY ATTORNEY IN FACT SHALL NOT TERMINATE IF I BECOME DISABLED OR INCAPACITATED OR IN THE EVENT OF LATER UNCERTAINTY AS TO WHETHER I AM DEAD OR ALIVE.
Powers of attorney are powerful estate planning tools. They can be used in the following ways:
- Physical Limitations. Example: an older gentleman has a hard time getting out of the house. Going to the bank becomes a chore that takes all of his energy. He can execute a power of attorney and name his daughter as his agent. Most banks will honor this and allow the daughter to conduct business on behalf of her father.
- Mental Limitations. Example: A mother is diagnosed with dementia or Alzheimer’s disease. Recognizing that her mental functions may diminish with time, she executes a power of attorney allowing her son to pay bills, manage her finances, and take care of her.
- Child Away at College. Example: Child decides to attend college far away from parents. Yet, child’s car is registered in Missouri and he has other accounts in Missouri. Child can give his parents power of attorney to manage his affairs while he is out of the state at college.
Without a power of attorney, if something happens to you, and you need someone to manage your affairs, your family will likely end up in probate court asking the judge for a Guardianship and Conservatorship. This is an unnecessary waste of time, money, and stress.
Take control. Plan ahead. Choose someone you trust. Create a power of attorney.