While we never want to think about dying and leaving our loved ones behind, planning for the future and the unexpected is the best gift that we can provide for our loved ones. An estate plan is an essential part of making sure your loved ones are taken care of if anything happens to you. What exactly is estate planning? In short, an estate plan is a set of documents that will ensure your wishes regarding your health and assets are carried out accordingly, during times you can’t make decisions for yourself and after you’ve passed. Remember – this includes instructions regarding who is going to take care of your children, not just your property. What does this really mean in practice?
The answer lies in balancing the push and pull of control and protection because in estate planning, control and protection are everything. The key to finding a particular balance means highly personalized estate plans to reflect individual circumstances: the right amount of protection from various people and organizations, and the right amount of control (or the ability to do what you want, when you want with the assets that make up your trust).
This article will first take a look at planning for times you can’t make decisions for yourself through incapacity planning. A second article will address planning for after you’ve passed away.
PLANNING FOR INCAPACITY
One of the most overlooked parts of estate planning that deals with this balance is incapacity planning; that is, planning that accounts for decisions to be made on your behalf when you’re unable to make them for yourself. The way we manage this risk is largely through two documents: the advance healthcare directive and power of attorney for financial matters.
ADVANCE HEALTHCARE DIRECTIVE
An Advance Healthcare Directive is a document that appoints someone else to make healthcare decisions on your behalf in the event of your incapacity. This document essentially guides your personal representatives through medical decisions during a time of great need and vulnerability. Putting this together ahead of time allows you to control every detail of your care even when you are not able to make decisions for yourself – you can even defer to professionals in certain situations if you’d like to avoid making an advance decision.
A typical Directive will include instructions concerning medical evaluations and treatment, long-term or hospice care, keeping you in your residence if possible, medical information and medical records, employing and discharging health care personnel, pain relief, and a Living Will, which would address end-of-life decisions like Do Not Resuscitate issues and burial instructions.
So what does this mean for you in finding that balance between control and protection? If you have a comprehensive Directive that includes the above and more, you will ensure that your healthcare decisions are honored at a time when you are unable to control the decision-making process. Creating this clear set of guidelines for health decision-making is essential to maintaining control and avoiding unnecessary third-party intrusion in very personal affairs.
POWER OF ATTORNEY
A Power of Attorney is a document that enables an individual or team of individuals to act as your financial agent. The scope of powers enumerated in this document can be very limited or quite broad depending on your personal preference.
What really should be at the forefront of your mind when creating a Power of Attorney should be the reason you have the document in the first place: to at the very least maintain the status quo during your incapacity. If you have a family, or a complicated estate, it’s even more important to maintain a sense of order so the lights at home are kept on, the mortgage is paid and the kids can keep going to school. Limiting powers too much can sometimes cause unnecessary delays and headaches. The key is to find the right balance for you.
Another thing to keep in mind, is you’ll want to ensure that the powers provided to the agent do not terminate in the event of your subsequent disability or incapacity. You can do this by executing a Durable Power of Attorney.
Ultimately, finding a balance between how much control you want to grant your agent and how much protection you want to have over your estate during incapacity is an entirely personal and individual decision. One way to ensure you are protected during incapacity is to use very specific language that leaves no room for interpretation in your Power of Attorney. But again, you’ll have to work with your attorney to find the right balance between control and protection for you.
PEACE OF MIND
Ultimately, estate planning is about your personal, individual circumstances. The end result should be a living, breathing set of documents that provides a plan during your incapacity and after you’ve passed away so you can have the peace of mind that you’ve planned for unknowns ahead of time. We’ll discuss planning for after you’ve passed away in a future article. If you have questions about incapacity planning, we’d be happy to discuss.
Matthew Schlau is a co-founding principal of Schlau|Rogers and an estate and business planning lawyer practicing in Orange, San Diego, Los Angeles and Riverside counties. He is a husband, father, blogger, crossfitter, and really good at helping people achieve their goals.
If you haven’t set up an estate plan for you and your family – we recommend you consider setting up a plan as soon as possible.