If you are young and healthy, it can be hard to think about worst case scenarios and planning for something bad happening to you. The likelihood is that you will live a long healthy life and may not need some of these documents until you are in your 80s or 90s. However, you don’t work in an industry like mine and not see a few worst case scenarios come to life. Whether you’re 22, 32, or even considering retirement, there are a few documents every person should have for themselves to ensure their loved ones have a plan in place should something bad happen. Below is a brief list of what each item is and how it would be utilized if you needed it.
This document allows you to describe in your own words what type of care you would want in the event of an incapacity or end of life situation (also known as a Living Will or Advanced Healthcare Directive). Additionally, it can be utilized to appoint a Healthcare Power of Attorney. This document is recognized as a legal document in 48 states and can be executed without an attorney; learn more at www.fivewishes.org
Healthcare Power of Attorney
This is the person you will designate to act on your behalf and make decisions regarding medical care in the event of your incapacity. You will need to designate a primary and at least one alternate agent. It is likely your estate attorney will recommend you execute an official HPOA document in addition to the Five Wishes but the designated people should match on both forms.
Advanced Healthcare Directive
This form allows you to leave instructions regarding DNR (do not resuscitate), organ donation, etc. and should match what you put on the Five Wishes. Your attorney will likely want you to have both documents but Five Wishes allows for more elaboration and detail than this form which is why we recommend you utilize both.
Durable Power of Attorney
This is the person you will designate to act on your behalf and make financial or other administrative type decisions in the event of your incapacity. You will need to designate a primary and at least one alternate agent. There are also corporate options that can be utilized as a final alternate should you want to give your family member or friend an out in the event they be called to serve but are unwilling or unable to do so when the time comes. Contact your financial planner and estate attorney to discuss this further.
Will vs Trust
In the simplest terms a Will is a legal document in which you bequeath your assets to the person(s) or entity of your choice and it does not take effect until you die. Wills must go through probate which takes at least 9 months to complete but can take several years. For someone who dies intestate, which is without a Will, the estate administration process often drags on for years as the court attempts to confirm heirs and tie up the decedent’s loose ends. A trust can be set up inside your will - called a Testamentary Trust – and is often used to receive assets for underage children in the place of creating a revocable trust. There are also living (revocable) trusts that can be set up while you are still alive and potentially be amended as necessary. Trusts can be quite complex so the attorney will need to go into detail where these options are concerned. If you have children you should consider who you’d appoint as guardian should you and your partner die before they are grown. Like any legal document, there will need to be primary and alternate agents appointed for guardian, executor and/or trustee. There are corporate options that can act as fiduciaries for a fee and are worth considering as estate and trust administration can be time consuming and potentially stressful for an average person to undertake. You’ll want to contact your financial planner and attorney to discuss this in more detail so they can best advise you individually.
As you can see, there are many decisions to be made and most of them should be at least considered before going to see the attorney so that you can get clear on what you want. You really only have two options when it comes to planning for your family – you can leave them a mess or you can leave them a gift. Which one will you choose?