Estate Planning

I’ve noticed that a fair amount of people feel that they only really need to draft a Last Will and Testament if they have young children or own significant amounts of property. Truth is, having a Last Will and Testament is a good idea for anyone. It puts you in control of your affairs while you still have the ability to exert that control.

Further, Estate Planning is more than just a Last Will and Testament. It is important to also draw up a Power of Attorney, which can enable someone you trust to take control of your affairs in the event you become incapacitated, and an Advance Health Care Directive, or “Living Will.” This goes beyond a Power of Attorney and nominates a person who will make serious medical decisions on your behalf should you become so ill you cannot do so for yourself.

Let’s go through these and discuss some considerations you’ll want to put some thought into before we put pen to paper.

When most people think of a Will, they think of a document that says, essentially, “who gets my stuff when I die.” Yes, that’s a big part of it. However, a Will can – and should – accomplish much more. For example, if you have young children, you will want to draft a provision in your Will that sets forth who will care for them in the event that both you and your spouse die before any of the children turn 18. This is called a Testamentary Guardianship. It is, obviously, a serious consideration, and is a responsibility that can only be handed to someone you trust without reservation.

Another consideration is who you will name as your Executor. The Executor of the Estate is the person you place in charge of making sure that your wishes, as expressed in your Will, are carried out. Again, it is a position of great trust. Usually, when I draw up Wills for a married couple (most often in the nature of reciprocal Wills), each spouse names the other as their Executor. However, it is highly advisable to have at least one, and ideally two, alternates, in case one of the persons nominated as Executor is either unable or unwilling to act in that capacity.

If you have young children, or if any potential beneficiary could still be a minor when you pass away, you will want to set up a testamentary trust. More than likely you are going to want to avoid a situation where a minor child comes into exclusive possession of a large sum of money. Instead, you’ll want to ensure that these assets are managed properly and used for the health, welfare, maintenance and education of the minor beneficiary. This is where you would establish a testamentary trust and appoint a trustee. The trustee’s duties would be to manage the assets for the benefit of the minor until such time as the assets – called the principal – could be distributed directly to them. The trustee has what is called a fiduciary duty, meaning they must act in their best judgment for the sole benefit of the beneficiary. Once again, this is a position of trust and due care should be given as to who you appoint.

A Power of Attorney is an important component of an Estate Planning strategy. It grants the person you nominate – called your Agent – broad powers to handle your financial affairs once the Power of Attorney becomes effective. Usually when I draft Powers of Attorney in an Estate Planning context, I draw them up as “springing” Powers of Attorney. This means that they do not come into effect until some condition precedent, typically incapacity. The main benefit of these is to enable the Agent to step into the shoes of the Principal – the person who nominated the Agent – and handle their financial affairs in the event they become unable to do so.

Without a Power of Attorney, the only other way to attain this ability would be for a Court to name a Guardian of the Estate and Person. My office does represent clients who seek Guardianship on behalf of an incapacitated person, but these proceedings are far more involved, time consuming and expensive than drafting a Power of Attorney.

Don’t wait on this. While a previously created Power of Attorney will be honored after incapacity has set in, a Power of Attorney cannot be created after incapacity has set in, as the Principal must be cognitively able to understand the importance and consequences of naming an Agent. Incapacity prevents this understanding, leaving a Guardianship as the only remaining option.

The final document you should draft as part of your Estate Planning strategy is an Advance Health Care Directive, often called a “Living Will.” Here, you will lay out in detail which medical treatments you do, and do not, want administered to you, and under what circumstances these treatments should be allowed or withheld, if you become unable to make these decisions on your own. As with so many other aspects of Estate Planning, this is your opportunity to make your own choices according to your own wishes while you still are able to do so.

In this document you will also appoint a Health Care Surrogate. This person is entrusted to ensure that the wishes as spelled out in your Advance Health Care Directive are honored by your medical team. Certainly, this is a person in whom you place great trust. However, careful consideration should be given to the emotional aspect of these duties. This is a person who may be asked, in accordance with your Living Will, to direct your medical team to withhold certain treatments under certain circumstances, with the likely outcome being that you will pass away. Not everyone will be up to making that call. You need to know that the person you appoint as your Health Care Surrogate will have the strength to honor your wishes.

Drawing up Estate Planning documents is an important and involved process. However, don’t let this deter you from moving forward. As I’ve said before, this is the only time you will be able to make these decisions for yourself. When it’s too late…it’s too late.