Although we are only a few weeks into the New Year, many of us have already forgotten about our resolutions, or are putting off what we intended to accomplish at the start of the year. If completing your estate plan in 2014 was one of your resolutions, then you’re ahead of the game. Many of us procrastinate because it is difficult to contemplate our own incapacity and mortality. It is also hard to dedicate the time, money, and effort when there constantly seem to be more pressing responsibilities.
However, creating your estate plan should be an urgent goal for you. Consider the fact that estate planning involves more than setting up a will or a trust; a comprehensive plan includes a healthcare power of attorney, property power of attorney, and advance medical directive, also known as a living will. The powers of attorney allow you to designate an agent to manage your healthcare decisions and financial affairs if you are unable to do so. Without these documents in place, if you become incapacitated a guardian will need to be appointed to make healthcare decisions and access and manage your assets on your behalf. Guardianship is a court supervised and expensive process. A petition is filed with the court, and the alleged disabled person is also entitled to legal representation. After a hearing on the matter, the court appoints a guardian. The guardian is then required to file annual reports with the court. These detailed accountings disclose how the disabled person’s money has been distributed and provide information about the disabled person’s physical and mental condition.
Executing a power of attorney is a simple way to plan for incapacity and avoid the need for guardianship, which is also costlier than preparing a power of attorney. A power of attorney provides greater control because you designate who will act as your agent, whereas in a guardianship proceeding, the judge decides who will serve as guardian. The judge’s choice may not be consistent with who you would have selected, had you made the decision yourself.
There are two types of powers of attorney. With a property power of attorney, you designate someone to handle your financial transactions. A healthcare power of attorney designates an agent to make healthcare decisions if you’re incapacitated. Your healthcare agent will use the instructions provided in your living will so that any decisions made on your behalf are done in accordance with the instructions you’ve provided in that living will. With both types of powers of attorney, it is advisable to designate a successor agent in case your primary agent is unable to act, resigns, or passes away.
A power of attorney must be executed prior to incapacity; otherwise, a guardianship will result. Don’t delay this very important estate planning matter. An estate planning attorney can help you put these documents into place.
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