Many people think that estate planning consists of having a will or a trust that will dispose of their property after their death. What happens to your assets after your death is certainly an important consideration of estate planning, but it is not the only consideration. Estate planning now encompasses what I will refer to as your “living” documents, more commonly referred to as advanced directives and powers of attorney. These documents are critical in the event that you become disabled and cannot make your own medical or financial decisions. The following examples are cautionary tales to consider if you avoid planning for life’s possibilities.
Ryan’s Story (the importance of medical directives)
Ryan was in his early fifties. He had multiple chronic ailments that he knew were likely to lead to complications that could include coma and premature death. Ryan had very strong feelings about not being kept alive by artificial means, which he frequently expressed to his wife and siblings because of the state of his health. Despite his knowledge and strong feelings, Ryan failed to take the simple step of executing a health care power of attorney or living will.
Ultimately, Ryan did experience serious complications due to his condition, resulting in a coma. The coma persisted for weeks, and the doctors told Ryan’s wife that he was unlikely to ever regain consciousness and, if he did, he would likely have suffered irreversible brain damage, meaning he would never be able to again lead a normal life. Ryan’s wife knew his wishes related to this dismal prognosis: he would not want to be kept alive by artificial means. However, she was too emotionally involved to be able to carry out Ryan’s wishes.
Had Ryan executed a health care power of attorney, he could have specified, in detail, what care he did or did not receive in the event he was in a persistent, vegetative state, providing written instructions to his agent instructing what to do in certain circumstances. For someone with strong feelings and an agent who might be too emotionally involved to carry out such instructions, like Ryan, a living will could also be incorporated. The living will would have become effective upon Ryan entering a persistent, vegetative state. With a living will, Ryan would have been able to speak for himself through the document, trumping any decisions made by his wife, whether as next of kin or as agent under a health care power of attorney, providing instructions directly to his treating physicians about what care he did or did not want.
Instead, Ryan’s wife was left without real instructions as to what Ryan wanted (it’s easy to doubt what someone would really want in these circumstances, less so when someone takes the formality of putting it in writing), and Ryan lost the opportunity to speak for himself. This ultimately resulted in Ryan spending weeks in a coma, receiving intrusive ongoing medical treatment, before his condition worsened and Ryan’s wife finally made the decision to discontinue further treatment. Although she discontinued treatment, she did not discontinue artificial respiration, nutrition, and hydration. This resulted in extending Ryan’s life far beyond the point he would have wished. Simply putting his words into action by executing a simple estate plan including medical directives would have avoided this result and relieved the strain on his wife and loved ones.
Tony’s Story (the importance of general durable powers of attorney)
Tony could also have benefitted from medical directives, but his story will focus on his need for a general durable power of attorney, which I’ll call a financial power of attorney. Tony was also in his early fifties. Tony had always been very independent and did not like people being involved in his affairs. Ultimately, Tony developed early-onset Alzheimer’s.
As a result of his condition, Tony was not able to remember to pay bills, and he had difficulty with numbers in general. This led to, for example, phone service being terminated, storage units at risk of being forfeited, and credit cards being denied due to lack of payment, all of which wreaked havoc on his credit, making it difficult for him to be approved for a lease on an apartment. Also, his difficulty with numbers led to confusion regarding what certain services cost, resulting in tremendous stress to Tony. And, Tony had substantial financial assets to provide for his day to day living, but he lacked the capacity to access the assets or to understand their nature or extent. Finally, Tony’s condition prevented him from understanding his need to file his taxes every year.
When Tony finally reached out to family for help, the situation was pretty grim, not only due to terrible credit but also due to past due taxes that resulted in substantial interest and penalties. The situation was made worse by the fact that Tony did not have a financial power of attorney, so no one actually had any authority to act on his behalf. In order for anyone to speak to any creditor, agency, or financial institution on Tony’s behalf, Tony had to be available to authorize the entity to speak to that person. Due to the nature of Tony’s condition, there were days that he was not capable of understanding what needed to be done, or why, or would simply refuse the assistance that he had previously requested.
If Tony had executed a financial power of attorney before becoming incapacitated, the agent could have taken any necessary steps to show that the financial power of attorney came into effect due to Tony’s disability and managed Tony’s affairs as set forth in the financial power of attorney. This simple document would have prevented or eliminated a lot of the negative financial consequences of Tony’s condition, and it also would have avoided the significant strain on Tony that resulted.
Although both Ryan and Tony’s need for “living” estate planning documents resulted from chronic medical conditions, the need for such documents is certainly not limited to people with such conditions. Life is full of uncertainties, and anyone can face a devastating incapacity as a result of a car accident, a sudden illness, or any number of other possibilities. The condition may be temporary or permanent, but planning for life’s possibilities will make it easier for your loved ones to care for you if the need arises. And, if you fail to plan for such contingencies, and are later not competent to do so, a court will decide who handles your medical and financial affairs, and most of the financial decisions will require court approval, making life even more difficult for your loved ones.
It is important to note that, with health care powers of attorney and living wills, if you are able to speak for yourself, you always do. The agent under a health care power of attorney cannot overcome your medical decision making so long as you are capable of expressing what care you do or do not want. A living will does not come into effect unless and until you meet certain conditions and, again, are unable to express what care you do or do not want to receive. A financial power of attorney can be effective immediately upon signing, commonly used by married couples for convenience, or it can become effective upon your disability, as determined based on the terms of the document.
If you have not incorporated “living” estate planning documents into your plan, you should contact an attorney to discuss whether such directives are appropriate for you.
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