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Estate planningis one of the most important steps you can take to make sure your property and health care wishes are honored, and that your loved ones are provided for in your absence. It involves planning for management of your assets during your life, appointing someone to act on your behalf if you become disabled or incompetent, and for passing your property on to your children or other heirs after your death. An estate plan can help you reduce tax liabilities, court costs and attorneys fees and it can also make it easier for your family to cope with the administrative and financial issues that arise if you become disabled or after your death. Following is a brief summary of the essential documents you should have:
LAST WILL AND TESTAMENT
A Willis a valuable legal document which directs who receives your property at your death and it appoints a personal representative to make certain that your wishes are carried out. If you have minor children, a Will enables you to appoint a guardian for their care.
If you die without a Will you are said to have died intestate and your property will be distributed to your heirs at law according to a statutory formula. In other words, the state will determine who receives your property at your death. These intestacy rules are inflexible and make no exceptions for those in unusual need. If you do not want your property distributed according to the state’s formula, it is crucial that you have a Will which clearly dictates how your property is to be distributed. For instance, you may wish to protect your assets if you or your spouse require nursing home care. There are strategies you can employ that will ensure that your spouse benefits from your estate if you predecease him or her, without leaving your estate vulnerable to the cost of his or her nursing home care. In addition, if you have a disabled child you will want to make special provisions in your Will to provide for that child without causing a disqualification from any public benefits he or she may be entitled to. A Will is valid until it is changed or revoked, and it may be changed or revoked as often as you wish, so long as you are competent. However, changes in your personal and/or financial circumstances and changes in the law may require changes in your Will to ensure that it is fully effective. A Will should be reviewed at least every 3 years to make sure that it accomplishes your desires. DURABLE POWER OF ATTORNEYA Power of Attorney is a written document appointing someone (your agent) to act on your behalf in financial and related matters (i.e. to sign checks, pay bills, buy and sell assets). When a power of attorney is in effect, your agent essentially steps into your shoes and makes financial decisions that are legally binding on you. A Durable Power of Attorney is valuable in that it remains in effect or becomes effective if you become incapacitated or mentally incompetent. A Durable Power of Attorney allows you to choose who shall act for you in the event that you become incapacitated or mentally incompetent rather than allowing a court to make this determination. In most cases, having a Durable Power of Attorney will avoid the need to seek appointment of a conservator if you later lose the ability to handle your affairs. A Durable Power of Attorney is effective only during your lifetime. A properly drafted Durable Power of Attorney is comprehensive, enumerating many specific powers. These powers must be carefully drafted into the document otherwise your agent may have no authority to act. An omission of a specific power is construed as an intent to fail to grant that specific power and could be detrimental to your assets. The most common Durable Powers of Attorney grant the agent the right to act immediately but they can also be drafted to grant “springing” powers to your agent. A springing power of attorney is drafted in such a way that it becomes effective only after one or two physicians certify your inability to act of your own behalf. The primary disadvantage of the use of the springing durable power of attorney is a difficulty inducing third parties to accept the authority of the agent without conclusively establishing the occurrence of your disability. It is important that you trust your agent completely and you should understand that your agent has a legal duty to act in your best interests. However, it is justifiable to be wary about giving a currently exercisable power of attorney to your agent. You may choose to execute a Durable Power of Attorney that grants your agent immediate powers to act on your behalf but have your attorney hold the documents in “escrow” until your agent presents proof of your capacity. This avoids the difficulties with third parties such as banks and other institutions from accepting the document but affords you the added comfort and security you desire. HEALTH CARE PROXYA Health Care Proxy is a written instrument giving authority over all decisions regarding your healthcare to a designated “Health Care Agent” if and when a physician determines that your are incapable of making or communicating those decisions yourself. A Health Care Agent can make every type of health care decision, including the use of life support systems and the administration of anti-psychotic medication. A Health Care Proxy is designed to minimize or eliminate the possible need for guardianship proceedings if you become incapacitated and are unable to communicate your decisions. It is very important that you discuss your wishes with your agent so that they may communicate your wishes if you are unable to do so. Your agent should understand your wishes regarding medical treatment and end-of-life decisions. Your agent has a duty to exercise his or her best judgment based on your personal values. If your personal wishes are unknown, then your agent is empowered to make decisions which he or she believes to be in your best interest. A Health Care Proxy takes effect only when you are deemed incapable to make or communicate your health care decisions by a physician. If you regain the capacity to make or communicate medical decisions, the proxy will have no effect. HIPAA RELEASEA HIPAA (Health Insurance Portability and Accountability Act) Release appoints a personal representative to receive any and all information, including confidential information, concerning your medical condition(s). Your personal representative is authorized to receive the same information that you would be entitled to receive. It is separate from your Health Care Proxy because your Health Care Proxy only becomes effective when you are determined incapacitated. You may want someone to have access to your medical records prior to that time. This release will allow someone to contact your insurance company or doctor’s office on your behalf if you have a question about a bill or a statement or allow them to discuss your care with your doctor if you are hospitalized. LIVING WILLA Living Will informs others what medical treatment you desire if you become terminally ill or permanently unconscious and are unable to make or communicate decisions regarding treatment. It is used by those persons who wish to express their feelings about the withholding or withdrawal of life-sustaining treatment that prolongs the process of dying. The Living Will may state your intent that extraordinary measures not be use to sustain your life if there is no chance of returning to health; or it may state your intent that all available measures be administered. Although, as current law stands, such a document is not legally binding in Massachusetts, it provides valuable evidence of your intent if you cannot speak or refuse medical treatment and can provide your health care agent with some guidance as to what your feelings are about these sensitive matters. This instrument is especially important if you do not have a person to appoint as your health care agent or if the person you have is unavailable. Without it, a court could be required to determine your wishes regarding withholding or withdrawing life-prolonging treatment. EMERGENCY GUARDIANSHIP PROXYAn Emergency Guardianship Proxy provides for the appointment of a guardian in the event of your death, incapacity or unavailability. The emergency guardian has the authority to make any and all decisions with regard to the welfare of your children. The document is valid for 60 days from the day it is activated, meaning 60 days from the day of the death or incapacity. It would also be valid if you were going on a trip without the children and wanted the guardian to have the authority to make decisions for the child in your absence. The proxy is particularly important in the event a permanent guardian needs to be appointed. It ensures that someone trusted has the authority to make decisions with regard to your children while the permanent guardianship is being processed. HOMESTEADA Homestead Declaration, once recorded at the appropriate Registry of Deeds, protects your home (within certain limits) up to $500,000 from the unsecured claims of creditors. A Homestead Declaration will protect you or your surviving spouse and dependent children against attachment, levy on execution, or sale to satisfy debts, so long as you occupy or intend to occupy such property as your principal place of residence. Only one spouse can file a Homestead for their family. However, should the parent who declares the Homestead die, the law protects the residence until the youngest unmarried child reaches the age of eighteen (18) and until the surviving spouse dies or remarries. It’s never too early or too late to develop an effective estate plan. If it has been more than three years since you last reviewed your documents, it’s time to dust them off as your situation has likely changed significantly since you last reviewed them. Don’t hesitate to contact the Law Office of Stephanie Konarski to schedule a confidential consultation to review your current documents or to put an estate plan to work for you. |
The Essential Estate Planning Documents
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Essential Estate Planning Documents
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