Three documents that every person needs
Estate planning can be an overwhelming process for many people. Deciding who will inherit your assets and who will be in charge of handing your estate after you die are not easy decisions. Sometimes clients find themselves so overwhelmed with these decisions, that they have never executed an estate plan. While there are important reasons to execute a Will (see our last blog “Do I Need a Will?” by Julie Ladimer), there are three documents that every person should have regardless of whether you are ready to move forward with a full estate plan.
The first document every person should have is a power of attorney. A power of attorney allows you to chose someone you trust (your attorney-in fact) to manage your financial affairs once you become unable to do so yourself. Their authority to handle your financial affairs ends at your passing. If you do not execute a power of attorney, and you become incapacitated, the court will decide who will take on this responsibility. You may have a sister who is an accountant, who is well suited for this responsibility, or you may have a son who is careless with his finances and not ideal for this role. Regardless of who you trust most in your life, you will not have any say in who becomes your attorney-in-fact unless you execute a power of attorney.
The second document that every person should have is a health care proxy. This document gives an agent authority to make health care decisions if you are unable to make those decisions for yourself. A health care proxy usually includes an Advanced Directive, also known as a Living Will. The Advanced Directive allows you to give guidance to your proxy as to your wishes regarding end of life decisions. By failing to execute this document, you may leave your family in the difficult position of guessing what type end of life treatment you want. Even worse, your family may disagree with each other as to what they think you want. In order to help you loved ones know your wishes, and to designate one trusted person to make those decisions, you must execute a health care proxy.
The final document that every person should have is a HIPAA release. Health and medical information is private and protected by federal law. This document is used in conjunction with the health care proxy to allow your chosen agent to have access to your medical records. Without a HIPAA release, a doctor is not obligated to talk to your named health care agent.
Whether or not you think you need an estate plan, or are ready to move forward with one, this documents are must-haves for every person over the age of 18. These documents are important whether you have no assets or many assets. Planning for your incapacity is a smart decision for you and your loved ones.