Mention estate planning and most people think of wills and trusts. But a good estate plan includes things to help you if you become disabled (Alzheimer’s disease, dementia, coma, vegetative state, critical illness, etc.). There are three documents to consider: an advance health care directive, a power of attorney for finances, and a trust. The first two are vital. The third is usually advisable, but may not be necessary in all cases.
An advance health care directive is sometimes called a living will or power of attorney for health care. It is a document that tells your doctors and loved ones if you want to be placed on life support and who will have the authority to access your medical records and consent to treatment. (It’s also a good idea to name at least one backup.) Be sure to discuss your wishes with the person you designate to make decisions. Not everyone is comfortable with such responsibility. You should also discuss these things with your loved ones. It is always easier to listen when things are calm, rather than suddenly learning of your wishes in a crisis situation.
A power of attorney for finances appoints someone to handle your money, property, and bills when you are incapacitated. The designated person is called attorneywhich has nothing to do with being a lawyer (a lawyer is a lawyer at law). The nominee must be good with money and responsible enough to take care of his property.
Sometimes the Advance Health Care Directive and Power of Attorney are enough, especially if you have few assets and nothing very complicated. But for many people, having a Trust is also a very good idea. Think of a trust as a special box in which you put your assets (bank accounts, stocks, your house, rental properties, etc.). The person you designate to look after the box is called the Trustee. This person is NOT Executor. An executor is appointed in a will, approved by a court, and only has authority after the executor’s death. A trustee generally does not need a brief approval and can handle things during his lifetime as well as after his death. A trust can provide greater protection and easier administration than relying solely on a power of attorney.
The number one mistake people make in estate planning is procrastinating until it’s too late. Without a directive, their care is left to fate. We all hate to think about our own mortality, so most of us do nothing. As the saying goes, “failing to plan is planning to fail.” Don’t become the next court case to make headlines because you didn’t follow through on your end-of-life wishes. Do not leave your family without being able to eat their affairs without a court order. With proper planning, you are in control. Make arrangements. It’s unpleasant to think about, but trust me, you’ll feel so much better once you’re done.
