Your will is done, so you know who your “stuff” will go to when you pass. Now you must prepare for what is for some individuals a fate worth than death – an event which incapacitates, but does not kill, them. But how can you prepare for an event which causes you to be legally incapacitated?
It is really quite simple. You identify at least one individual whom you trust to make medical and financial decisions on your behalf in the event you can no longer do so yourself. The person you choose is called your agent. When the person accepts appointment as your agent, he or she enters into a fiduciary relationship with you. What does “fiduciary” mean? It means that when the agent is acting on your behalf (you are called the principal) he or she must act solely in your best interest. The term “fiduciary” is usually associated with money, but is appropriately used in the context of medical care as well. The important idea here is that the person you choose to be your agent is someone in which you have trust and confidence will do what is best for YOU.
As with the executor of your will, it is best to name an alternate agent. Now that you have identified the individual who will act on your behalf when you cannot, it is time to see your attorney for the preparation of powers-of-attorney and advance medical directive.
A financial power-of-attorney permits your agent to act on your behalf with respect to financial matters, such as banking issues and paying your bills. You may grant your agent broad of powers or limit the matters on which the agent may act. How broad the agent’s powers should be will depend, in part, on the size of your estate. For example, if you do not own real estate, then the agent need not be given power to engage in real estate transactions on your behalf. You will also need to decide when the agent’s power begins – immediately or only upon a doctor’s certification that you are unable to conduct your own affairs. This decision will rest upon several factors, including your age and state of your health. If you have a history of strokes or heart attacks, you may not wish to require a medical certification. It is important to understand that when an agent acts on your behalf with respect to the purchase of consumer goods, real estate, and debt, among other things, over a period of time that your agent is binding you to pay the amount owed.
A medical power-of-attorney permits your agent to make decisions on your behalf with respect to medical matters, such as treatment you will receive, the type of medical facility to which you will be admitted, and medications to be administered to you. Unlike an agent under a financial power-of-attorney, an agent under a medical power-of-attorney has no power to bind you financially. Thus, your agent can make decisions about medical treatment you will receive, but cannot bind you to pay the bill when it comes due unless the same person is the agent under both the medical and financial power-of-attorney. You need not appoint the same person for both powers-of-attorney.
If you fear that you may become legally incompetent because of a diagnoses of dementia, Alzheimer’s or similarly devastating disease, you may execute a Declaration of Guardian in the Event of Later Incapacity or Need of Guardian (“Declaration”). The Declaration identifies the individual who will be your legal guardian with the ability to act on your behalf in the event you can no longer do so. The difference between the Declaration and a power-of-attorney is that a court appoints the guardian via court order and then supervises the guardian’s actions on your behalf. The Declaration is more appropriately used when the incapacity is permanent in nature as opposed to a temporary incapacity due to surgery, auto accident and the like.
You will also want to have an advance directive prepared for you. The advance medical directive tells the doctor (as well as your family) whether you want extra-ordinary measures taken to keep you alive in the event you are terminally ill or brain dead but being kept alive via life support. This document takes the burden off of your loved ones to make the heart-rending decision of discontinuing life support. The advance directive can also specify whether you wish to be an organ donor if you have not indicated your desire on your driver’s license.
You now have the most basic estate planning documents executed. You will need to review your estate planning documents at least every five years – more often if you experience significant life events such as the birth of a child.