Category Archives: Advanced Directives

When do I update my estate plan?

Clients often ask, how often should I review my estate planning documents? The best answer is, when anything major changes in your life, when there are changes to the tax laws, changes with estate related laws, or when you have moved from one stage of life to another.

If you made your will when your children were young and named guardians who would take care of them and handle any assets, and now you have young adult children, the guardians will no longer be relevant. But while we hope our 22 year old children can physically fend for themselves, do we want them inheriting a chunk of money outright? Perhaps not; perhaps a review of your documents is in order. If these same children are now 18 and 19, do you have health care proxies for them? Will the college health service be authorized to speak with you if there is an accident or illness? Time to get some health care proxies in place.

Did you have a power of attorney, health care proxy, or other document drawn up when you were close to someone who is no longer in your life? While a divorce or legal separation may take the spouse out of your documents, breaking up with a significant other does not have the same impact. They could still be in your plans, perhaps in a way you would no longer be comfortable with. (I personally would not want any ex-boyfriends showing up in my hospital room to make decisions for me while I was unconscious!)

Has the probate code just undergone a major overhaul? (Yes, if you live in Massachusetts). Are Federal tax laws changing? (Not really, but we get to worry a lot about that).

Really, there is never a bad time to call your estate planning attorney and just check in as your life changes.

PS: If you move assets into an irrevocable trust, check with your tax specialist about whether you need to file a gift tax return!

Share

Estate planning and divorce

I know that neither of these topics is particularly cheery, but in some cases they do go hand in hand.  If your marriage is going downhill, and you anticipate a divorce, or are in the process of getting divorced, it makes sense to take two immediate steps:

Name someone other than your spouse as your healthcare proxy; and

Revoke any durable power of attorney that allows your spouse to sign papers on your behalf, and designate a new power of attorney to act for you if you are incapacitated.

These two steps should be taken right away.  As long as you are still legally married, these documents generally continue to be in effect, and as you probably know, a divorce can take a long time to finalize.

Comprehensive estate planning is important, but it is unrealistic to think that most couples can deal with it while going through a separation or divorce.  Estate planning can wait a bit, but these other steps cannot wait.  My office is happy to assist you with this, and credit the amount towards an estate plan, or if you are working with a family law attorney, he or she should be able to assist you with a new health care proxy and power of attorney.

Share

I’ve GOT a will…

But I made it two spouses, three children, and two businesses ago.  When your life changes, your estate plan should ideally keep up with those changes.  You do not need to revise a will every time something changes in your life –many documents are drafted to take some changes into account.  However, as part of your financial planning, you should revisit your estate plan every 3-5 years, and definitely in the case of a divorce or marriage

Divorce:  In some states marriage or divorce nullifies a will, health care proxy or power of attorney.  In other cases it may not.  If you and your spouse are on good terms and you want him or her to make the decisions about your medical care, it is best to revise your health care proxy to make it clear that this is your desire.  Similarly, you may not want your soon to be former spouse to have the ability to write checks from your bank account, but even if divorce nullifies a power of attorney, simply being in the process of divorcing will not.  Revoke or change your health care proxy, will, and power of attorney if you realize that your spouse is no longer a trusted partner and you are heading your separate ways.

Wills, trusts, health care proxies and powers of attorney are powerful documents; take a look at them from time to time and be sure they are still relevant to your life.

Share

Planning for Incompetence

One of the scariest scenarios we face is the prospect of no longer being able to make our own decisions and to think for ourselves.  Often this is a process of gradual decline, and either we, or those close to us, can see the changes and understand what is happening.  If you have not done advanced planning, that’s a good time to get moving.  There are some fairly straightforward documents that you can draft and execute which will allow those you love and trust to make important decisions. 

1.  Health Care Proxy:  this document names the person who can make medical decisions for you in the event that you are unable to make them yourself.  In Massachusetts, only one person can be named at a time, but you can have successor agents in case the first person is not available.  I recommend that everyone have a Health Care Proxy (including young adults so that doctors must listen to their parents, or to the person they have designated).

If you do not have a Health Care Proxy and there is a disagreement about your care, it is possible that a Guardian will have to be appointed by the probate court.  This is a process that can be time consuming, complex, and expensive.  In the end, the court decides who will make decisions about your care, not you.

2.  Durable Power of Attorney:  this document names a person who can sign documents on your behalf, and who can make financial and administrative decisions on your behalf.  This can be effective now, or it can come into effect upon your incapacity. 

Like a Health Care Proxy, if you do not have a Durable Power of Attorney, and become incompetent, a family member or caregiver will have to go to court to be named to represent you.  This person is called a Conservator, and this process, like naming a Guardian, requires court involvement and much expense.  It also means that the court makes the final decision about the person best suited to manage  your affairs.  Judges are wise and thoughtful, but they don’t know you or your family members the way that you do – don’t you think you’ll make a better decision?

Share

Capacity–Can she really make that decision?

Capacity Requirements

Proper execution of a legal instrument requires that the person signing have sufficient mental "capacity" to understand the implications of the document. While most people speak of legal "capacity" or "competence" as a rigid black line–either the person has it or doesn’t–in fact it can be quite variable depending on the person’s abilities and the function for which capacity is required.

One side of the capacity equation involves the client’s abilities, which may change from day to day (or even during the day), depending on the course of the illness, fatigue and the effects of medication. On the other side, greater understanding is required for some legal activities than for others. For instance, you need to have a higher and clearer amount of “capacity” to enter a contract than to write a will. 

Capacity to make a will was summed up by the Massachusetts Supreme Judicial Court:

Testamentary capacity requires ability on the part of the testator to understand and carry in mind, in a general way, the nature and situation of his property and his relations to those persons who would naturally have some claim to his remembrance. It requires freedom from delusion which is the effect of disease or weakness and which might influence the disposition of his property. And it requires ability at the time of execution of the alleged will to understand the nature of the act of making a will.

This is a relatively "low threshold," meaning that signing a will does not require a great deal of capacity. The fact that the next day the testator does not remember the will signing and is not sufficiently "with it" to execute a will then does not invalidate the will if he understood it when he signed it.

The standards for entering into a contract are different because the individual must know not only the nature of her property and the person with whom she is dealing, but also the broader context of the market in which she is agreeing to buy or sell services or property.  This is a more long range kind of understanding, and requires a more complex ability.

While the standards may seem clear, applying them to particular clients may be difficult. The fact that a client does not know the year or the name of the President may mean she does not have capacity to enter into a contract, but not necessarily that she can’t execute a will or durable power of attorney. The determination mixes medical, psychological and legal judgments. It must be made by the attorney (or a judge, in the case of guardianship and conservatorship determinations) based on information gleaned by the attorney in interactions with the client, from other sources such as family members and social workers, and, if necessary, from medical personnel. Doctors and psychiatrists cannot themselves make a determination as to whether an individual has capacity to undertake a legal commitment. But they can provide a professional evaluation of the person that will help an attorney make this decision.

Because you need a third party to assess capacity and because you need to be certain that the formal legal requirements are followed, it can be risky to prepare and execute legal documents on your own without representation by an attorney.

Share

Durable Powers of Attorney–What?

A durable power of attorney gives another person (agent or attorney in fact)the right to make financial decisions on your behalf.  (It’s “durable” if it still works when you are incapacitated).  A power of attorney is useful if you’re closing a real estate deal when  you’re in China, someone else can sign the paperwork for you.  It’s also a basic estate planning tool that allows your agent to pay your bills and handle your financial matters if you’re incapacitated. 

A power of attorney can be very narrow in time (only effective on the closing date) or broad (starts now and is in effect until I die).  It can also be broad or narrow in its powers.  It is a very powerful tool, so be sure that the person, time period and powers are those you’re comfortable entrusting to your agent.  In general, financial institutions prefer original DPOAs, so when you’re at your attorney’s office, you might execute several originals. 

Much like other estate planning documents, it’s important that you communicate your wishes to your agent, so they will act in a way that you would approve of.  A final note, this document terminates on death, so your agent will not be able to access your safety deposit box if you die with your will there, so DON’T PUT YOUR WILL IN YOUR SAFETY DEPOSIT BOX.

Share

Health Care Proxy–Who decides on my care?

Everyone over the age of 18 should have a health care proxy.  Period.  Everyone.  That means you, too.  A health care proxy appoints the person of your choice to make health care decisions for you if you are unable to do so.  If your college student has a car accident and is taken to the local hospital, you want to be called, consulted, and listened to.  A health care proxy can assist in this process.  (Have him or her keep a copy in the glove box).  A beloved family member is fading from a variety of age related illnesses, a health care proxy will help her get (or not get) the type of treatment SHE would choose.  Will your frail parent want to be resuscitated if it will result in pain, broken ribs, and the extension of their terminal illness?  Are you a “keep on trying no matter what!” type of person? Make that clear to your health care proxy.

A health care proxy in Massachusetts does not replace a living will.  It appoints one person who can direct the medical decisions of the person who has made the document (principal).  The best way to assure that your wishes are honored is to speak with the person you have chosen, and have some honest conversations about your wishes, well before the need arises.   What makes a life worth living, rather than simply existing in pain or incapacity?  This is a personal viewpoint, and one that it’s hard to know about someone else.  Two tools I use with my clients are the “What If Workbook” and “Five Wishes”.  Each lays out some of the questions and decisions we face with end of life medical care.

One final point.  If you want your children or spouse or best friend to be able to speak with your medical provider, they should be named in a HIPPA release form.  Our privacy laws can be a great help in protecting confidentiality, but can frustrate our families attempts to understand our condition and prognosis.  A health care provider may not speak to you even if you are a parent, spouse, or child without legal permission to do so.

Share