ESTATE PLANNING FOR THE YOUNG FAMILY – THE “OTHER” DOCUMENTS

Before beginning my estate planning practice, I only associated the term “estate planning” with the Will. While the Will certainly is the centerpiece of an estate plan, it is not the only document involved. I have already discussed at length the trust, but there are “other” documents as well.

The term “other” is somewhat of a misnomer. It implies that these “other” documents are less important. But they are just as crucial to the Young Family’s estate plan as the Will and the Trust. The “other” documents discussed in this post are: the Financial Power of Attorney, the Health Care Power of Attorney, the Advance Directive for Health Care, and the HIPAA Authorization. No estate plan is complete without these documents.

Some attorneys combine the Health Care Power of Attorney and the Advance Directive for Health Care into the same document. There is nothing wrong with doing so, and I do this sometimes as well. But I will discuss them separately in this blog post because they do different things and are governed by different sections of Alabama law.

The “Other” Documents – Basic Terms for Power of Attorney

You, as the person making the power of attorney, are the Principal. The person nominated in the power of attorney is the Agent. In the power of attorney, you grant the Agent authority to act on your behalf. The limits to the Agent’s authority are specified in the document and can vary greatly depending on each client’s specific circumstances. When using the power of attorney, the Agent has a duty to act only in your best interests.

The “Other” Documents – The Financial Power of Attorney

In this document, you, as the Principal, grant the Agent authority to manage your property if you are incapacitated. If you become incapacitated without this document, nobody would automatically have authority to manage your property. Someone would need to seek this authority in a time-consuming and costly judicial proceeding called a conservatorship. The Financial Power of Attorney is a relatively straightforward document. But it can save the Young Family thousands if it is needed.

You, as the Principal, can grant as much or as little authority to the Agent as you would like in the Financial Power of Attorney. For instance, some Powers of Attorney are limited to only dealing with real property. But at its basic level, a typical Financial Power of Attorney in the Young Family’s estate plan confers on the Agent the general authority over the Principal’s property. This would include management powers such as paying your bills, entering basic contracts, filing your taxes, managing your assets at financial institutions, selling your property in the event doing so is in your best interest, and other “everyday management” actions.

The “Other” Documents – The Health Care Power of Attorney

In this document, you, as the Principal, grant the Agent the authority to make health care decisions for you if you are incapacitated. If you become incapacitated without this document, nobody will automatically have the authority to make health care decisions for you. Someone would need to seek this authority in a time-consuming and costly judicial proceeding called a guardianship.

The Health Care Power of Attorney does not deal with end-of-life decisions. Those decisions are made in the Advance Directive for Health Care. While both sometimes are included in the same document, they ultimately are different things. For instance, the Health Care Power of Attorney is used when you are incapacitated and still need to go to regular appointments. Or maybe you need a minor procedure. If you are incapacitated, then you cannot give informed consent to that procedure. But the Agent in the Health Care Power of Attorney can do so for you. Like the Financial Power of Attorney, the Health Care Power of Attorney is a straightforward document that can save the Young Family thousands if it is needed.

The “Other” Documents – The Advance Directive for Health Care

This document applies in two scenarios: (1) terminal illness and injury and (2) permanent unconsciousness. Before the Advance Directive for Health Care becomes effective in the context of terminal illness and injury, two physicians must agree that you have a condition that cannot be cured and that you likely will die from this condition soon. Before the Advance Directive for Health Care becomes effective in the context of permanent unconsciousness, two physicians must agree that you can no longer think, feel anything, knowingly move, or be aware of being alive. Furthermore, the physicians must agree that this state will continue indefinitely without hope for improvement.

In each scenario, you answer two yes or no questions: (1) would you like to have life-sustaining treatment? and (2) would you like to have food and water provided through a tube or an IV? You can make these decisions while you are healthy and have the capacity to do so. This takes the burden of making the decisions off your family members. It also avoids disagreements among family members regarding what you would have wanted because your wishes are clearly stated in the Advance Directive for Health Care.

The “Other” Documents – The HIPAA Authorization

The HIPAA Authorization authorizes your medical providers to share information with certain people. A complete estate plan should include this document so that the individuals appointed in the documents listed above are able to view your medical records and speak to your medical providers. This ensures that they are making well-informed decisions.

The Young Family’s estate plan should include, at a minimum, a Will (that creates a Trust), a Financial Power of Attorney, a Health Care Power of Attorney, an Advance Directive for Health Care, and a HIPAA Authorization. Everyone’s circumstances are different, and some Young Families’ estate plans may include documents in addition to these five basic ones. It is important that the Young Family seeks the help of an attorney to help with their estate planning.

If you have any questions or would like to schedule an appointment to discuss estate planning, please call me or send me an email. You may access my contact information by clicking the “view profile” button linked below.

In next week’s post, I will discuss what creating an estate plan typically looks like for the Young Family, from beginning of representation to the execution of documents.

Disclaimer

This blog series is meant to be informational only. This blog series discusses general principles associated with estate planning for the Young Family, but your specific situation may differ slightly. Therefore, this blog series is not meant to provide specific legal advice, and it does not create an attorney-client relationship unless one is specifically entered into by you and Rosen Harwood, P.A.

For previous blog posts in the series on Estate Planning for the Young Family, see the links below.

Rosen Harwood Blog