estate planning documents The beginning of a new year is a good time to take a look at your estate plan to make sure it is up to date. Less than half of people in the US actually have any estate planning documents in place and many of those people may have outdated documents. Documents that were created when your children were born may need updating 20, 30, or 40 years later, after your family and financial situation have changed entirely.

Estate planning is all about five essential estate plan documents. Here they are in order of importance:

  1. The Durable Power of Attorney

The most important estate planning instrument for taking care of you and your family during life, as opposed to after death, is the durable power of attorney. This appoints one or more people you trust to step in and handle your finances and legal matters in the event of your incapacity, whether through illness, dementia, or an accident, and whether the incapacity is temporary or permanent. In the absence of a durable power of attorney, family members often must resort to going to court to be appointed guardian or conservator. This causes delay and expensive and unnecessary legal fees. It can also cause infighting by family members since you have not chosen who should step in.

While the concept of the durable power of attorney is simple – I appoint you as my agent for financial and legal matters in the event of incapacity – the devil, as always, is in the details. You have to make decisions about how many agents to appoint, whether to have alternates, whether to allow gifting, when the power of attorney should take effect, and whether to grant trust powers.

The Florida legislature made a comprehensive overhaul of the Florida power of attorney statute in 2011.  The changes were substantial and effect virtually every power of attorney in existence.  If your durable power of attorney was written prior to October 1, 2011, then you very probably need a new power of attorney as a part of your estate plan documents. Even if your power of attorney was prepared after October 1, 2011, you may want to revisit the document because of changes in your circumstances and some modest changes made in the power of attorney statute since then.  Unfortunately, many people wait until the power of attorney is needed before attempting to create one, or update one.  Often it is too late by then because the elderly adult who needs to appoint someone to act on their behalf is already incapacitated and cannot legally sign. Your estate planning attorney can help you with these details and help you avoid a situation where your estate plan documents are improper or outdated.

  1. Health Care Proxy

Like the durable power of attorney, a health care agent steps in for you to make health care decisions when you are unable to communicate with your health care providers, or when and if you become incapacitated. Unlike a durable power of attorney, it only takes effect when a doctor determines that you are unable to make decisions yourself and you usually only appoint one individual to serve at a time. This is so there will be a single point-person in dealing with medical professionals and no possibility of disagreement or stalemate between co-health care agents. You can and should name one or more alternates to the principal agent.  You accomplish this estate plan document by implementing appropriate review periodically to ensure the document still appoints the person you prefer to be in that capacity.

The Florida statutes that establish the right to make your own decisions about your end of life options, as well as the health care proxy, which in Florida is called a designation of health care surrogate, is Chapter 765 of the Florida Statutes.

The main problem with health care proxies, or in Florida the Designation of Health Care Surrogate, is that agents often have no idea or only a vague idea of what decision the patient would make in a particular circumstance. This can be addressed in one or more of these ways: a medical directive, a conversation between the potential patient and the agent, and a number of available workbooks (see below).  A general medical directive can be included with the health care proxy that says either (1) pull the plug if I’m in a vegetative state or irreversible coma, (2) balance the potential benefit and discomfort of any proposed treatment, or (3) do whatever you can to keep me alive.  When you prepare the appropriate documents, you get to choose the answers to those questions.  If you don’t take the necessary action to implement appropriate legal documents, then someone else will be making those decisions for you – regardless of your desires.

Part of the problem with giving guidance to one’s agent is that it’s hard to predict situations that may occur and treatments that may be available. A number of organizations have developed workbooks to provide more detailed guidance than simply “keep me alive at all costs” or “do nothing.” They include: The Consumer’s Toolkit from the American Bar Association and Five Wishes from Aging with Dignity.  The Northeast Florida Hospice and local hospitals have joined together to provide another comprehensive alternative to the plain statutory designation of health care surrogate.  Honoring Choices is a program specifically designed for the residents of Northeast Florida in  cooperation with the hospitals in Northeast Florida to provide advance directives that are filed and maintained for all of the hospitals.  You can learn more about the Honoring Choices program at this website.

  1. HIPAA Release

In addition to a designation of health care surrogate, everyone needs a HIPAA release. The HIPAA law bars medical practitioners from releasing medical information to anyone, even to the spouse of a patient, without a release. You may well ask why a heath care proxy isn’t sufficient. There are a few answers: First, the health care proxy is “springing” in that it doesn’t get activated until or unless the patient is declared incapacitated. Second, while the health care proxy may only name one person at a time, you may well want a much broader group of people to communicate with medical providers. The agent may not always be available or may not be the first person on the scene.

All too often we have seen medical providers hide behind HIPAA to avoid having to deal with family members, sometimes to great harm to the patient. Especially in emergency situations, family members often have vital information about the patient, whether it’s the medications he is taking, allergies he may have, or his usual physical and mental health. HIPAA does not say that medical personnel cannot listen to this information, but it can be misconstrued in that fashion. It’s best to eliminate the whole issue by having a HIPAA release signed and available in case it’s ever needed.

You may also want to allow certain family members to access information from your health care providers regarding your condition and the medical treatment options, but not necessarily provide those family members with the authority to make decisions for you.  The HIPAA release and authorization is the only option to accomplish that result.

  1. Your Will

Your last will and testament says who will get your stuff when you die and who will be in charge of paying your bills, filing your tax returns, gathering your stuff and distributing it according to your instructions.

But here’s the irony: although the will gets all the recognition and there’s a whole set of laws governing the so-called Florida “probate” process, these days most assets pass outside of the probate court. What the last will and testament says does not apply in many situations, including: joint accounts with right of survivorship that pass to the other joint owners, retirement plans and life insurance policies that go to designated beneficiaries pursuant to the beneficiary designation on file, and property in revocable trust or irrevocable trust that passes to the beneficiaries named in the trust document. Only what you own that is titled in your own name alone passes under the will through the probate process. In addition, while the will requires a lot of formality – two witnesses and a notary all signing at the same time – these other forms of passing on property usually require only the signature of the owner, or sometimes simply filling out a form online.

That said, wills are important in terms of distributing your tangible personal property – stuff you can touch, such as furniture, jewelry, tools, clothing, boats, and cars. Your will appoints your executor or personal representative who is in charge of carrying out your wishes. This can be very important in avoiding squabbling among children. A very important consideration is that your will can be used to appoint guardians for minor children. (Hence every couple with minor children should have wills to establish who will be the guardian of their children in the event of a joint death – so the respective families don’t end up fighting with each other over the minor children’s care.  A last will and testament also permits you to make charitable or other specific bequests. Finally your will can serve as a failsafe in case other means of passing on property fail.

If you do not have a last will and testament in place at the time of your death, then your assets will be transferred in accordance with the Florida intestacy law.  An intestate estate can result in the distribution of your assets far differently than you might expect – especially where there are blended families or where it is impossible to determine which spouse died first in a common accident.

Your last will and testament must be signed in accordance with the requirements of the Florida statutes dealing with wills, and must comply in all of the requirements of the statutes dealing with wills and probate.  While there may be occasions where a “basic” will is sufficient, there is no such thing as a “simple” will.  Professional assistance from an experienced estate planning attorney or wills and trusts lawyer is critical to getting the right information in your last will and testament.

  1. Revocable Trust

The documents listed above may be enough, but you may also want a revocable trust, sometimes called a “living” trust. A trust is a legal entity under which one or more people, the trustees, manage property or investments for the benefit of one or more people, the beneficiaries. In a revocable trust, typically at the start the same person acts as the creator of the trust, the grantor or donor (sometimes called a “settlor” or “trustor”), as trustee and as beneficiary. Not much changes in their lives after they set up the trust. But it avoids probate by transferring legal ownership to the trust (so that there remains no assets in your named individually at your death, which triggers probate), and naming successor beneficiaries after the initial beneficiary passes away. While probate is not the worst thing that can happen to people, avoiding it can save heirs time, money, aggravation and trouble.

More importantly, a trust is an effective tool for intervening in the event of your incapacity. Financial institutions that are resistant to accepting durable powers of attorney appear to be more comfortable with trusts when a successor trustee is named. But it works even better when a parent names one or more adult children as co-trustees. The parent then does not give up any rights or autonomy, but permits the child to begin participating in financial management. Even if the child does nothing, he or she can view accounts and step in immediately if a problem arises. This can be especially important in the event of dementia or scams. Seniors are the primary victims of financial scams and having a trusted family member with access to accounts can help identify scams and permit intervention to limit their effect.

In addition to probate avoidance and incapacity protection, trusts are infinitely flexible in terms of how they are drafted and the impact they can have on an estate plan. They can state any number of specifics on who receives property when, for instance, permitting its distribution over time to children and grandchildren. The options and opportunities for creativity are limited only by the experience of your estate planning attorney or wills and trusts lawyer.

As you can see, most of these estate plan documents are actually about life not death. They’re still about planning for an unwanted event – incapacity of some sort, or death. By taking the initiative to ensure that you have the proper estate plan documents in place to protect you and your family, you get to make the choices rather than someone else.  By keeping your estate plan documents current through regular reviews of your existing documents, and making appropriate changes when necessary, your estate planning documents will follow your desires, even as those desires change from time to time as you experience life.

So, do you and your family a favor:  Include a review of your estate planning documents (or the establishment of them if necessary) as a part of your New Year’s resolutions.  Happy New Year!!

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