End of Life “What Ifs” Needs More than a Will or a Living Trust

Published In Law

Even though you have signed your will, and even if you also set up a living trust, your estate planning is not complete. You still need to address several “what ifs”. In fact, these “what ifs” are important for people of all ages to address, not just the elderly or those worried about elderly parents.

These “what ifs” are the unexpected — the car accident that can leave someone in a coma, the sudden stroke that destroys one’s ability to communicate, the sudden onset of dementia, a dramatic turn for the worse from a disease or condition that you thought was chronic or only slowly progressing. In fact, “what ifs” can include any condition that temporarily or permanently destroys the ability to make rational health care decisions or handle financial matters.

Such common yet often unforeseen and unwanted situations are not covered by a will — a will only controls the distribution of property after the person dies. Even having a living trust that names someone as the successor trustee is rarely a complete answer: while the successor trustee would be empowered to exercise control over the assets in the living trust, he or she would lack any control over property that had not been placed in the living trust. For example, if one’s house or bank or brokerage accounts have not been formally transferred to the living trust, the successor trustee would have no right to deal with those assets. Remember, too, that retirement plan assets (such as IRAs and 401(k)s), life insurance policies, and annuities are typically not transferred to a living trust. Thus while a living trust is helpful, it too has limits.

So how can someone — you included — assure that a responsible person will be able to step in and take control without the need to go to court to appoint a “conservator” — often a costly and lengthy process — given that anyone can be incapacitated without warning? In such situations — and there are many — who handles the finances and who knows what kind of medical care you want to receive or decline and in what circumstances?

Dealing with these “what ifs” requires advance careful planning. That often means a discussion with family about topics everyone wants to avoid. But it is a discussion every family should have.

As important as having that discussion is, what is often more important is executing the critically important documents that are essential to handling life’s unexpected and unwanted events.

You can deal with the financial and health care “what ifs” in a number of ways. Some are legally binding; some are not. As you do this, check the laws and requirements in your state. They do differ. You can usually find the information you need online at such leading websites as www.freeadvice.com.

Advance Planning for Finances

Durable power of attorney: Putting in place a durable power of attorney is one of the easiest and least expensive tasks imaginable. A durable power of attorney can empower a designated person (or persons) to make financial decisions for the person granting the power of attorney. Most importantly, granting someone else power of attorney does NOT impact one’s own power to act.

Granting someone else power of attorney does NOT strip you of the power or the right to make your own decisions for yourself. Further, a power of attorney need not be permanent. You can cancel or revoke the power of attorney at any time during your lifetime so long as you remain mentally competent.

The person you empower to act on your behalf is called the “attorney-in-fact.” He or she need not be an attorney-at-law or a financial advisor. Most attorneys-in-fact are a trusted family member or trusted friend of the person granting the power of attorney. When acting under a power of attorney, the attorney-in-fact is under a legal duty to act reasonably and in the interest of the person who granted him or her the power of attorney.

You can make your power of attorney as broad or as narrow as you choose. For example, you can allow the person you name to deal with all of the assets you hold in your own name, or only certain classes of the assets (such as bank accounts and stock brokerage account) or only certain specific assets (such as a vacation home).

When the power of attorney is intended to be as broad as possible — enabling the attorney-in-fact to deal with all assets in your name — it is referred to as a General Power of Attorney. Even with a General Power of Attorney, it may be possible to carve out certain assets.

It is important to keep in mind that a power of attorney only extends to assets held in the person’s own name. If assets are held in a living trust, it is the named trustee — not the person with power of attorney — who exercises control over the assets held in the trust. Similarly, if the person granting the power of attorney owns real estate — such as a house — as a joint tenant with someone else, the other joint tenant also would have to agree to anything the attorney-in-fact might want to do with the real estate.

You also can decide — by choosing the proper form — whether the power of attorney is to become effective immediately, or if it should only become effective at some future date, or upon the occurrence of some future event — such as only if your physician determines in writing that you no longer are able or competent to make decisions.

When the power of attorney is not to become immediately effective, but is intended only to spring into effect upon the occurrence of a future event, it is called a Springing Power of Attorney.

It is critical for the power of attorney to be “durable.” In many states, unless the power of attorney specifically states that it is durable (in terms the state requires), it would cease to be effective just when you would need it most — the point at which you are no longer mentally competent.

A power of attorney is NOT a substitute for a will. All powers of attorney end upon the death of the person granting the power.

You can revoke most powers of attorney at any time simply by telling your designated agent that you have revoked or canceled the power of attorney, but to be certain it can’t be used, you should require your attorney-in-fact to return the power of attorney documents, and also notify any bank or brokerage firm that you have revoked the power.

Forms: Forms for establishing a power of attorney are available on the internet, but, again, be aware that powers of attorney come in many different varieties. Requirements and forms may vary by state, so be sure that the forms you download are current and appropriate for your circumstances and the state involved. Further, some banks and brokerage firms are very fussy, and may even try to insist on your using their own form when you make a power of attorney

Execution: Finally, a power of attorney must be properly executed — typically before a notary public or some other officer legally authorized to administer oaths — and have the notary or other official’s seal to be effective.

How long is power of attorney valid? Finally, to prevent the possibility that a power of attorney granted many years ago may be improperly used, or may have been revoked, many states limit the length of time a power of attorney remains effective. Be sure that if a power of attorney was signed and notarized years ago, it is still valid and will remain valid for a sufficient number of years into the future.

Health Care Powers

Several types of health care directives are available, but as with the durable power of attorney, deciding which to use and what needs to be covered demands advance planning and discussion, both with family and with health care providers.

As with financial matters, you should set up a “Durable Power of Attorney for Health Care,” sometimes known as a “Medical Power of Attorney” or “Health Care Directive” or “Living Will” (which is very different from a Living Trust) or “Health Care Directive.”

In the health care directive, you typically name a trusted person — often a close family member — to make medical decisions for you if you are not able to communicate your own wishes. This individual is often known as your health care agent or “health care attorney-in-fact”.

Your health care agent also is responsible for assuring that you receive the kinds of care you want and that you do not receive any care you do not want. The advanced care directive or living will has nothing to do with your property but does allow you to specify the kinds of treatment you do or do not want under specific circumstances.

Some states combine the durable power of health care attorney and living will, both of which are legal documents, into a single form that is typically known as an “Advance Health Care Directive.”

A POLST (Physicians Orders for Life Sustaining Treatment), DNR (Do Not Resuscitate) and DNI (Do not Intubate) express an individual’s wishes for the kind of care they wish to receive, or for procedures they do not want. The POLST essentially represents an individual’s instructions to health care providers but is not a legally binding document. Again, forms and even names of these documents vary by state.

Where to Keep These Documents

None of these documents should be drawn up, finalized and then locked in a drawer or a safe deposit box. Your family needs to be aware of these documents and where they are kept. Health care providers need to know about any POLST, DNR or DNI instructions.

One way to do this is to make photocopies of all the essential documents and give them to family members, your health care agent, and your health care providers who can make them part of your medical record. In case of an emergency response to a 911 call, it is a good idea to have the DNR/DNI instructions posted on the refrigerator door. That’s where emergency responders are instructed to look.

The U.S. Living Will Registry will register living wills, organ donation authorization, emergency contacts and health care proxies so that they can be located quickly if needed by health care providers. The registry provides a sticker to attach to an insurance card or driver’s license so the documents can be located in case of an emergency.

The Family Caregiving Alliance offers additional help with a one-page PDF form on “Where to Find My Important Papers“. Fill out this form and then make sure family members have a copy.

(This article was reviewed in February 2024 since it originally published in August 2016.)

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