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Advanced Health Care Directives Explained

Two-Thirds Of All Americans Are Missing This Essential Estate Planning Document

Megan Gorman Senior Contributor

Estate planning is a complex world for most Americans. For many, the process can seem overwhelming and expensive. For others, it is uncomfortable to confront one’s mortality and requires tough decision making. But regardless of one’s feeling on estate planning, there is one estate planning document that all Americans should have: A Health Care Directive.

But what exactly is a health care directive? It is a legal document in which an individual specifies their decisions for caregivers in the event of illness or dementia and directs end of life decisions. It can also provide guidance on how the caregivers should handle the body after death.

Health care directives are also known as living wills, durable health care powers of attorney or medical directives. But they all serve the same function:  to provide guidance and direction on how one’s medical and death decisions should be made.

The Impact of Estate Planning

While wills and trusts have been around for centuries, health care directives are a relatively new legal document. They came into existence in 1976 when California passed the first law that permitted health care directives. By 1992, all 50 states had similar laws.

That the law was so quickly accepted across the country is an indication of why these documents are so important in today’s world. A key concept is that of control. Estate planning allows us to have control on certain issue when we are impaired and after our death.

Yet despite how important a health care directive is, a 2017 study found that only a third of all Americans have one, which is surprising since both attorneys and health care professionals advocate for this document.

While we often think of death as a single event, in most cases it is a process. As we work through a directive, it is important to visualize how each step will play out.

Choosing the Right Agent

A key decision in a health care directive is choosing one’s agent. The agent is a proxy who acts on your behalf to make decisions that are consistent with your wishes, so it’s important to pick someone whose values are aligned with yours.  The agent is your advocate on decisions such as whether you want to have treatment continued or just be kept comfortable in palliative care. These are intimate, life changing decisions.  For most married people, the spouse is a likely choice for this role. For the  contingent agent, adult children, other close family members or friends can be ideal.

Once you choose an agent, you should sit down with the person and go through the directive. Hearing you explain your decisions and thoughts will provide guidance for them if and when the need for them to step in arises.

After One Passes

The agent’s role in the health care directive does not end at death, but continues to ensure that our post-mortem wishes are carried out. When the individual passes, the agent takes control of the body. Even before the funeral plans are addressed, the agent has to make sure that any organ donation wishes are carried out. Often this decision is indicated on one’s driver’s license, but it is also restated in the health care directive. If an individual chooses to donate their body, their health care directive can provide important details. In most states, there are four choices for donation: transplant, education, research and therapy, and options for further parameters as well. For instance, if someone wishes to donate only certain body parts, this can be made explicit in a health care directive.

Once donation wishes are carried out, the agent helps to make sure funeral wishes are handled properly. Burial is an ancient ritual. From the preparation and disposal of the body to the accompanying religious rites, it is a time-honored tradition. But never before have we had so much choice in how we want our bodies to be handled after our deaths. In the past, many felt bound by religious tradition, but funeral planning today is much more a reflection of an individual’s values.

These instructions can be listed in the health care directive and can be as simple as burial or cremation. But there is flexibility with how elaborate you wish to be in detailing your funeral plans, including who you want for your eulogy, songs to be played, even the selection of flowers.

Be Proactive

Ultimately a health care directive allows you to control an important part of your legacy. You will have a clear voice in the decision-making process from medical decisions to funeral procedures. It is important to take care of this document done sooner rather than later.

Once this is put in place, despite all apprehension about the estate planning process, you will likely feel you can rest easy having gotten this part of your life in order.

 

| Rick | 0 Comments | Blog, Estate Planning, Living Trust

PROTECT YOUR PASSWORDS IN YOUR ESTATE PLAN

PROTECTING YOUR PASSWORDS

If you keep a mental inventory, use a password manager, or have a written record of your passwords (which is not recommended by anyone), take a quick count. You’re likely to find you may have some or all of the types of accounts listed below: 

  • Email accounts
  • Online bank accounts
  • Online brokerage accounts
  • Online shopping accounts
  • Online bill paying
  • Social media accounts
  • Photo and video sharing accounts
  • Gaming accounts
  • Online storage accounts
  • A website or blog
  • A domain name
  • Materials and coding that are copyrighted

These are digital assets. They are part of your virtual life, as is any digital property you own, such as computers, external drives, storage devices, smart phones, digital cameras, e-readers, and other devices.

Digital assets should be part of your estate plan

Unless you live off the grid, it’s likely your digital life will outlive you and become a part of your legacy. Your digital assets may have significant financial or personal value for your heirs. Consequently, you should give some thought to how these assets should be managed after your death.

The catch is digital estate planning can be tricky. Many digital accounts and assets cannot be transferred to a new owner because they are not your property. Assets that fall into this category are subject to contracts and licensing agreements established with a service provider.

For example, if you’ve spent significant sums accumulating a virtual music library, you may not be able to pass it on through a will or another estate planning tool because you do not own the digital music files, according to Nolo.com. This may also be true with other types of accounts.

“Social network accounts, domain name registrations, email accounts, and most other types of online accounts are ‘yours’ by license only. When you die, the contract is over and the business that administers the account controls what happens to it,” explained Betsy Simmons Hannibal on Nolo.com.

This doesn’t mean you have no control over what happens to these accounts. Your estate can leave instructions about account management and should provide a complete record for your executor. In an article on LegalZoom.com, attorney Jeffrey Salas offered an opinion about best practices. He recommended:

1.  Checking the account providers’ Terms of Service/Terms of Use. Work with your estate planning attorney and the digital executor you’ve appointed to review requirements for different types of accounts. For example:

  • Leave usernames and passwords for any online financial accounts – banking, utilities, brokerage, mortgage, retirement plan, life insurance, tax preparation, or others – to the executor as they will need this information to pay bills, close accounts, and administer your estate.
    • Social media companies have diverse policies regarding the management of digital assets upon the death of the user. Some delete or deactivate accounts after being notified of a death. Others put accounts into ‘memorial’ status.
    • In general, companies will not know about the death until they’re notified. As a result, a digital executor who is armed with passwords may be able to access your account to post final updates, delete items (per estate instructions), or delete/deactivate accounts.
    • Email accounts, online communities, and blog management may also be guided by provider agreements. However, your executor may be allowed to notify friends or followers of your death and then delete, print, or archive your communications.
    • Digital photos that are stored online may be passed on through a will or another estate planning tool.
    • If you have one or more websites, domain names  may have value and they may be transferrable.
    • If you have an online store, you may want to leave instructions about what should happen to the store, the items for sale, and any income or profits that may continue to arrive.

2.  Add language regarding digital assets to your will and/or trust. Currently, there is no uniform federal law to guide the management of digital assets. At the start of 2017, Kiplinger reported, “Federal law regulating access to digital property does not yet exist. At this time, 29 states have established legislation or laws to protect digital assets and to provide a deceased person’s family procedures and rights to manage those accounts and assets after death.”

Regardless, it can still be a good idea to include language that specifies your wishes for the treatment of each of your digital accounts.


 3. Check the law in your state. Talk with your attorney or advisor about whether any laws your state has that apply to digital assets, and make sure your estate plan is consistent with these laws.

While estate and inheritance laws are behind the curve when it comes to digital assets, it is important to inventory your digital assets and decide how they should be managed upon your death. If you would like additional information about estate planning, please give us a call

| Rick | 0 Comments | Blog, Estate Planning | , , , ,

Estate Planning Checklist

Everyone needs some degree of estate planning. Estate plans need to be tailored to the needs of the individual. The following estate plan checklist will explain various types of estate planning documents, and help you evaluate those that will be of value to you. Even if you decide to turn the matter over to an estate planning attorney, you should still have a basic understanding of what is involved.

1. Cover Estate Planning Basics

A comprehensive estate plan should consider what happens in the event of both death and disability. It should take into consideration what you want to happen to your property upon your death, the financial well-being of your family, the degree to which probate can be avoided, and how to eliminate or minimize estate taxes. These goals can be accomplished through various means, including properly setting up ownership of assets, designating beneficiaries where possible, and executing one or more estate planning forms. In addition to financial matters, an estate planning checklist should also consider the guardianship of any minor children, and medical treatment planning.

2. Plan Your Asset Ownership

Any asset that has title documents (real estate, motor vehicles, etc.) can be set up so that upon your death the title automatically passes to a co-owner. Most often this is a spouse. The title document must clearly indicate that ownership is held as joint tenants with rights of survivorship, as tenants by the entireties, or as community property.

There are two potential downsides to adding someone as a joint owner. First, you will need the joint owner to agree to any sale of, or loan secured by, the property. Second, if the value of the property exceeds a certain amount, it could trigger the federal gift tax.

3. Determine Beneficiary Designations

For some assets you can designate someone to receive the property upon your death, without giving them any current ownership rights. This is often done with bank and other financial accounts (usually called pay-on-death or POD). Designating a beneficiary is available in almost all states for brokerage accounts, and in some states for real estate, motor vehicles, and other assets with title documents (usually called transfer-on-death or TOD).

3. Cover Your Debts With Insurance

One way to ensure that all of your debts (including burial expenses) are paid in the event of death or disability, and that your loved ones are provided for, is through auto, homeowners, disability, and life insurance.

4. Get A Last Will and Testament

A last will and testament takes care of any property that must be probated. A last will can also deal with the care of any minor children (or adult children with disabilities). You designate who will get any property that hasn’t been handled through joint ownership or a beneficiary designation, appoint someone you trust as the executor of your estate, and appoint someone you trust to be the guardian or conservator of your minor or disabled children.

5. Consider A Living Trust

Especially if you have a large estate, or many beneficiaries, a living trust is usually the best choice for handling distribution of property, avoiding probate, and minimizing estate taxes. To avoid probate, most people create a revocable living trust (“revocable” since you may revoke the trust at any time). Property title is transferred from you to the living trust, and you become the trustee. While you are still alive, you control the property. You manage the property the same as if it was still in your name (sell or mortgage it, for example), and may acquire more property and add it to the trust. Upon death, a person you appoint as your successor trustee assures that the property is transferred to those you designate as trust beneficiaries. This transfer does not require probate. The successor trustee would also manage the trust if you become mentally incapacitated. People sometimes create an irrevocable living trust (most often for Medicaid planning), which also avoids probate, but requires the person creating it to give up the right to revoke it.

6. Consider A Financial Power of Attorney

A financial power of attorney authorizes someone you trust to act on your behalf in financial matters. The person who gives the authority is called the principal, and the person who has the authority to act for the principal is called the agent or the attorney-in-fact. Many states have an official financial power of attorney form.

Depending upon how it is worded, a power of attorney (or POA) can either become effective immediately, or upon the occurrence of a future event (such as your mental incapacity). If effective immediately, your agent may act even if you are available and not incapacitated. If a POA becomes effective upon the occurrence of a future event, it is called a springing power of attorney, because it “springs” into effect if the event occurs. The authority conferred by a POA always ends upon the death of the principal.

7. Consider A Health Care Power of Attorney

A health care power of attorney designates someone you trust to make decisions regarding your health care in the event you are mentally or physically unable to make decisions for yourself. You should discuss your desires for medical treatment with your health care agent (sometimes called a surrogate).

8. Get A Living Will

A living will, also known as an advance directive, sets forth your wishes regarding what types of life-prolonging medical treatment you do, or do not, want in the event you become terminally ill or injured and are unable to communicate your wishes. A living will goes along with a health care power of attorney, as it can serve as a guide to your agent, or can express your wishes in the event your agent is unavailable at a crucial moment.

9. Leave Information for Executor and Statement of Desires

This is not a legally binding document, but gives valuable information and guidance to your executor. It should include the information needed to clearly identify and locate all of your financial accounts, insurance policies, credit cards, vehicle loans, and mortgages. It should include contact information for relatives and close friends to be notified of your death; where assets are located (safe deposit boxes, storage units, etc.); and instructions regarding your desires for burial, cremation, funeral ceremonies, organ donation, etc.