Traditionally, estate planning has focused on minimizing estate taxes and directing the disposition of your assets after death. Today, managing your affairs often includes the issue of long-term health care. What would happen if you were to experience a debilitating illness or become incapable of managing your own affairs? Such a situation could occur gradually, due to a progressive medical condition, or suddenly, due to an unexpected accident or illness. If such an event were to happen, who would make your important legal, financial, and health care decisions? On what authority would this individual act?
Fortunately, advance directives—legal instructions that express your wishes regarding financial and health care decisions in the event that you become incapacitated—can help deal with such contingencies.
Legal and Financial Decisions
A durable power of attorney grants authority to another person to make legal and financial decisions on your behalf in the event of mental incapacity. The powers granted can be broad or limited in scope. A durable power of attorney can assist you with your personal finances, insurance policies, government benefits, estate plans, retirement plans, and business interests.
Health Care Decisions
A living will generally allows you to state your preferences prior to incompetency regarding the giving or withholding of life-sustaining medical treatment. In most states, you must have a "terminal condition," be in a "persistent vegetative state," or be "permanently unconscious" before life-support can be withdrawn. The definition of these terms and the medical conditions covered may vary from state to state.
A health care proxy allows you to appoint an agent to make health care decisions on your behalf in the event of incapacity. These medical decisions are not limited to those regarding artificial life-support.
Advance directives by durable power of attorney, living will, or health care proxy are generally inexpensive and easy to implement. They are essential estate planning tools for all individuals, regardless of age. Without such documents, court intervention, involving a great deal of time, expense, and stress to your family, may be necessary to carry out your legal, financial, and health care wishes at precisely the moment when timeliness and ease of action are needed most.
To learn more about state-specific advance directives, visit Caring Connections, a program of the National Hospice and Palliative Care Organization, at www.caringinfo.org. As with all estate planning issues, it is important to discuss the impact of advance directives with your team of professional advisors. $
Current tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the particular set of facts and circumstances. The information contained in this newsletter is not intended as tax, legal, or financial advice, and it may not be relied on for the purpose of avoiding any Federal tax penalties. You are encouraged to seek such advice from your professional advisors. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Written and published by Liberty Publishing, Inc. Copyright © 2009 Liberty Publishing, Inc.