What Else Do I Need to Complete My Estate Plan?

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Often, estate planning clients know they need to have a Last Will and Testament and perhaps even a Revocable Trust. Sometimes, however, they may not realize that they also need other documents to complete their estate plan.

The simple reason why multiple documents are necessary is because each document has a separate purpose. The Last Will and Testament generally identifies who is in control of your probate estate and who is to inherit your probate estate. Similarly, the Revocable Trust generally identifies who is in control of your Trust estate and who is to inherit your Trust estate.

The Will and the Trust are important documents and both are needed in most estate plans. Nonetheless, they do not answer every estate planning question. For example, if I were to become mentally incapacitated, who would make decisions relating to my medical care or my financial affairs? The Last Will and Testament does not address these issues at all. The Revocable Trust addresses these issues with respect to Trust assets only.

Health Care Advance Directive and the Durable Power of Attorney

For most clients, the answer to these questions lies in the Health Care Advance Directive and the Durable Power of Attorney. With these additional documents, you may designate individuals to make medical and financial decisions for you.

By the way, Florida law provides a default answer to these questions. As you might expect, this answer may not be the way you would choose things to be.

For example, a Florida statute says that your legally-appointed guardian (further discussed below) may make medical decisions for you. If you do not have a guardian, your spouse may do so. If your spouse is not available, your adult children (by majority vote) may do so. Otherwise, your parent may make your medical decisions, followed by your adult siblings (again, by majority vote) may do so. If all of the foregoing are unavailable, the statute allows for other adult relatives who are particularly close to you, or even close friends, to make decisions. As you might expect, enforcement of the statute gets tricky if a ‘close friend’ wants to tell a doctor what to do.

Even with such a generous statutory framework, the default answer may be inconsistent with what you want. You may want to name just one of your adult children to make those decisions; or exclude some of your adult children entirely from the decision making process; or bypass your spouse; or make some other plan. Doing so requires you to create a Health Care Advance Directive.

Further, you may want a ‘Living Will’, which is a document that says that you don’t want heroic life-sustaining measures taken for you if you are dying. These documents are very common among estate planning clients, who often appreciate that their loved ones will not have to make those difficult decisions at that very difficult time. There is no default Florida law that addresses the issues covered by a Living Will.

Florida law also does not have any default provisions to name family or others to be able to handle your financial decisions for you. Without a Durable Power of Attorney naming persons to make those decisions for you, you will need a court-appointed guardian.

A guardian is appointed by a court to make medical and/or financial decisions for a mentally incapacitated individual. Any interested person may file an application seeking to be named as guardian. In most cases, the court will require a medical examining committee to visit the individual and determine whether a guardian is needed. The court typically holds a hearing to review the examining committee’s findings and allow other evidence to be heard. If the court determines that a guardian is needed, the court enters the appropriate orders appointing the guardian.

A court may determine that a guardian is needed only for certain reasons, such as managing an incapacitated individual’s checkbook, but that the individual has sufficient capacity to determine where they will live and make other decisions. In this case, the court may appoint only a limited guardian. A court may also determine that a ‘plenary’ guardianship is required, which covers all issues.

If a guardian is appointed for financial matters, the guardian is required to file financial accountings each year describing the incapacitated individual’s assets, liabilities, income, and expenses. If a guardian is appointed to care for the person of an individual, the guardian must report to the court each year as to the care of the individual.

Obviously, the court-appointed guardianship is a more expensive and formal approach that creating a Durable Power of Attorney and a Health Care Advance Directive.

A Durable Power of Attorney names an individual or entity of your choosing as your Agent to make financial decisions for you. The document must be signed before a notary public and two witnesses to be valid.

The Durable Power of Attorney is a detailed document that lists many types of decisions that you authorize your Agent to make for you. By statute, it is insufficient to simply say ‘all decisions’ or similar expressions. Instead, the document must describe particular types of transactions. For example, your document may authorize your Agent to sell real property for you, open bank accounts for you, and take other actions. For this reason, these documents tend to number several pages.

A Health Care Advance Directive is in many respects similar to a Durable Power of Attorney, but the Health Care Advance Directives concerns only medical issues. With a Health Care Advance Directive, you authorize your Surrogate to make decisions regarding treatment, medication, surgery, and similar decisions for you.

The Health Care Advance Directive may also include a Living Will. The Surrogate can be authorized to enforce the terms of the Living Will.

By the way, both the Durable Power of Attorney and the Health Care Advance Directive may be changed or terminated at any time, should your circumstances change.

When creating your estate plan, don’t forget your Health Care Advance Directive and Durable Power of Attorney. The process of ‘getting your affairs in order’ is not complete without these other documents.

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