Planning for Your Own Death - Legal Affairs
Addressing legal and financial issues associated with dying is important for several reasons. First, you can specify, in advance, how your hard-earned assets are to be distributed after your death. Second, you can record your medical wishes and designate a trusted person to serve as your voice should you become unable to communicate prior to your death. Finally, you can gain a sense of peace from knowing that you have done your best to protect your family, and to remove one of the stressors that can cause problems for grieving survivors.
Only a brief summary of end of life legal and financial planning is presented here. If you are interested in learning more, consult with a lawyer who has expertise in estate planning. Once you have created the necessary legal and/or financial documents, make sure to put them in a safe, accessible location (which is known and accessible to trusted others), such as a safe deposit box, or a lawyer's office.
- Wills and Estate Planning. A will is a legal document that allows you specify how your property and assets should be divided, and how custody of your children (if applicable) should be handled upon your death. Wills are an alternative to default methods determined by individual states (for example, assets going directly to a spouse). Wills are also a way to avoid the lengthy and expensive process called "probate." Probate is process that occurs when someone dies and there is no will available to guide how property and custody distributions should be managed. During probate, a court makes a plan to distribute assets and place minor children with guardians. This process can take many months or even years, and often puts considerable financial strain on surviving family members and the estate.
As part of the estate planning and will process, you can choose to establish trusts (see the financial section later in this center), or make gifts to heirs or charitable organizations. Both can be used to reduce the amount of taxes due upon death, as well as making sure that personal wishes are honored.
It is not necessary for a lawyer to be present during the creation of a will. Paralegal professionals can assist with will preparation, and do-it-yourself forms are available in paper or software formats from respected publishers. However, it is a good idea to hire a lawyer if your wishes about property division are at all complex, or if you are concerned about minimizing tax implications surrounding inheritance issues.
In many states, wills are not legal unless they have been signed in front of a Notary Public (a person who is government authorized to administer oaths and to attest to the authenticity of signatures), as well as multiple witnesses. Multiple copies of your will should be stored in safe places where they can be easily retrieved in the event of your death.
- Health Care Directive. A health care directive (also known as a living will or advanced health care directive) is a document that enables you to legally record your wishes concerning whether 'heroic' or extended medical care measures should be taken to prolong your life should you become incapacitated and unable to speak on your own behalf. It is important to understand that this document will only take effect if you become incapacitated.
Health care directives are not legally valid until they are notarized. In addition, the person creating the health care directive must be of sound mind at the time the document is signed. Accidents that result in incapacitation may occur at any time, and without such a document in place, it is possible that your life might be artificially extended against your will. For example, consider the case of a young woman who was kept alive via a feeding tube for seven years while her husband, parents, courts, and state/federal legislators argued about her medical wishes. All of that could have been avoided if she had a health care directive in place at the time of her heart attack.
- Conservatorship. A conservatorship (or guardianship)is a complicated court arrangement that gives an individual legal power over the financial affairs of another person. Conservatorship arrangements are pursued only when an individual is judged (by a court) to be no longer capable of managing his or her own affairs (e.g., someone in a coma or in the advanced stage of Alzheimer's disease). Conservators can be friends, family members, or court-appointed individuals from state agencies. Conservatorship works to safeguard the affected person's financial assets by making sure that bills are paid on time, that money is allocated for savings, etc. Conservators can also help when the person they are watching out for is unable to weigh the risks and benefits of important financial decisions. The court-appointed conservator is required to make regular reports to the court regarding expenditures. Special permission may be required before any major financial decisions are made on behalf of the incapacitated individual, including the purchase or sale of major assets such as a house.
Conservatorship can be a time consuming, expensive and ineffective process. Declaring a person legally incompetent and appointing a conservator requires a relatively complicated court procedure. In addition, ongoing court appearances, which are mandatory once a conservatorship has been granted, are costly and time consuming. There is always the possibility that the conservator will abuse his or her power over the managed financial assets. Most people suggest, therefore, that appointing a conservator should be avoided, when possible.
- Durable Power of Attorney for Finance. Often, conservatorship can be avoided by constructing a durable power of attorney for finance. This document gives another person the legal authority to act on your behalf with specific regard to managing their finances. Should you become incapacitated, the document remains in effect until you recover or die (at which point the document becomes invalid and your will takes over).
The difference between a conservatorship and durable power of attorney for finance is that a person does not have to be declared incompetent in the court system to use a durable power of attorney document. For example, if you know you will be hospitalized or otherwise incapacitated for a while, you can grant your spouse a durable power of attorney for finance to enable him or her to temporarily pay bills and conduct routine banking matters using assets that he or she normally does not control. Once you return home, you would then resume financial control over your assets.
As suggested by the above example, the main reason to complete a durable power of attorney for finance is to insure that important bills are paid and other important maintenance payments get made. When a durable power of attorney has not been created, and you become incapacitated, a court gets to decide when and how important bills (such as your child's tuition, or your mortgage payment) will be taken care of. Arranging in advance to grant someone else the power to pay bills in this nature is thus a way of reducing family stress.
Like other legal documents, the durable power of attorney for finance can be created without the assistance of a lawyer. The document must be notarized and witnessed before it becomes valid. The person creating the document can also specify or narrow the scope of financial powers granted to the designated executor so as to limit that person's ability to mismanage funds.
- Durable Power of Attorney for Health care. Within the health care directive (described previously), or as an attachment document, you can name a trusted family member or friend as a "health care proxy." This document is sometimes referred to as a "durable power of attorney for health care", (although the individual named as proxy does not have to be an attorney). Through this document, your proxy gains the power to make health care decisions on your behalf if you become incapacitated. Make certain to ask permission before designating someone as your health care proxy! Some people may be uncomfortable taking on such enormous responsibility for your welfare. It is also important to have a clear discussion about your medical wishes with your proxy, because it is difficult to construct a health care directive document that covers all possible medical situations. Remember to stress to your friend or family member that the health care proxy does not get to make decisions for you unless you become incapacitated.