Estate Planning: Beyond the Will

When I started organizing my will a long time ago, the attorney I planned to use started referencing a bunch of other documents that would be included in the package.

I was, of course, suspicious of some complex legal upsell, but I listened. As she explained all of the other documents and why there were needed, I realized I did indeed want each and every one of them. These documents, to borrow from Rumsfeld, were \”unknown unknowns\” – I didn’t know what I didn’t know. But as I learned more about them, I realized that not having them, in many cases, could lead to a serious Oh S*** moment.

Estate Planning Stuff

Here’s the full list of estate-planning documents I was to receive in my package:

• Will
• Financial power of attorney
• Medical power of attorney
• Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)
• Appointment of Agent to Control Disposition of Remains
• Directive to Physicians
• Declaration of Guardian

I can’t say if this list would be correct for someone else (and even if it were, how these documents are styled may differ depending on where one lives). But understanding what I needed may well lead others to discover some of their own “unknown unknowns”. It was sobering to realize how important these “unknown” documents could be, but putting them in place brought a huge sense of relief.

Will

This is the only thing that was on my original shopping list – something to take care of all my stuff when I die. It also addressed a lot of important estate-planning issues (naming a guardian for my kids and setting up trusts if the missus didn’t survive me) that needed attention. Since this was the first time I’d ever drafted a will, it was a lot better than the one I had. But it was just the beginning.

Financial Power of Attorney

This one is cool, and I immediately saw its worth. With this document, I named my missus as my agent / attorney-in-fact with all sorts of powers:

• Real property transactions;
• Tangible personal property transactions;
• Stock and bond transactions;
• Commodity and option transactions;
• Banking and other financial institution transactions;
• Business operating transactions;
• Insurance and annuity transactions;
• Estate, trust and other beneficiary transactions;
• Claims and litigation;
• Personal and family maintenance;
• Benefits from social security, Medicare, Medicaid, or other governmental programs or civil or military service;
• Retirement plan transactions;
• Tax matters.

I also set up my brother as a successor agent.

When could this be valuable? If I’m incapacitated, there are a lot of things my wife might want to do that she couldn’t without this document. She gets to actually act as me for any of the powers I’ve given her.

As an example, if we ever want to sell our home (located in a community property state) we’d both need to sign all of the documents. But what if I had been squished in a car accident and was completely incapacitated? Then my missus would bust out this document and sign once as herself and once as me (technically, as my “attorney-in-fact”). I believe she could even bring a lawsuit – acting as me – against the guy who squished me.

The missus and I share most accounts, but for any account that is solely in my name (an IRA, for instance), this document allows her to act as me as needed.

Having my brother as a backup could be incredibly valuable – if my wife were out of commission as well (or worse), he could use our assets – working with my wife’s own agent, if needed – to help administer our affairs. (Sidebar – I trust my brother; you definitely don’t want someone you don’t fully trust to be your agent for any estate planning document.)

The Financial POA could be very handy if the need ever arose. It’s a very powerful document, and mine went into effect immediately. I did notice, however, that my attorney put a clause in that if I named my spouse as agent (as I did) and we were no longer married or a divorce was pending, the missus couldn’t be my agent / attorney-in-fact. Attorneys really are more of the “glass half empty” kind of people.

You may think that just because you’re married, your spouse can do whatever might be needed with your finances. For a good test of this, try calling up his/her credit card company, identifying yourself, and asking for information on their account. I imagine you won’t get far.

If the need for a Financial Power of Attorney arose and I didn’t have one, I’m sure my wife would be able to find some way – probably involving attorneys and courts – around it, but this seems like a much easier way to address the potential need.

What it doesn’t cover, though, is any medical decisions or actions. And that brings us to…

Medical Power of Attorney

This document allows my named agent / attorney-in-fact to make any health care decisions for me when I’m incapable of making them myself (as deemed by a physician).

I went with the missus again as my agent with my brother as successor. This will be a recurring theme.

I honestly don’t know what would happen if I didn’t have a Medical Power of Attorney and got squished / incapacitated. I suspect things might be OK if my wife was around since spouses seem to have have special privileges in medical matters, but things would get complicated really fast if she weren’t.

Without a Medical POA, I have no idea how my brother would be able to take care of medical decisions if I were counting on him (again, lawyers and courts might be involved), but thanks to having this document in place, I can safely file that scenario in my  “Don’t Know / Don’t Care” file.

Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)

There are apparently a lot of limits on what medical providers can tell other people about your medical condition, and those limits seem to be covered by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). If you’re curious, and I’m sure you are, you can read more about HIPAA here.

This HIPAA document “releases” the medical providers from their confidentiality obligations for the people I name as my agents – my wife (and brother, as needed) can receive all past/present/future medical information about me. If I’m squished in a hospital bed somewhere, I definitely want a free flow of information from the doctors to the people I trust.

I suspect a spouse would already have access to some (all?) of a person’s medical information, but this HIPAA document makes sure. I don’t know what rights my brother has without this document, but I know exactly what rights he has with it; that will be handy if my missus and I are squished at the same time.

Appointment of Agent to Control Disposition of Remains

This allows me to name yet another person as my agent / attorney-in-fact – I’m building an impressive tally of these, but I am keeping it a little boring by again using the missus with brother backup combination. This time, my agent gets to make any decisions with respect to the disposition of my remains. Lucky them.

One funny bit: it specifically says that all decisions made by my agent, including cremation, shall be binding. I’m no expert on cremation, but I think it’s a pretty binding process all by itself.

I don’t expect this area to be a contentious one for me / my body in my family, but when you read stories of families squabbling over what to do with a loved one’s body, the value of some clarity in this area is obvious.

Directive to Physicians

With this document, I choose to die as gently as possible (by discontinuing treatment) “If, in the judgment of my physician, I am suffering with an irreversible condition so that I cannot care for myself or make decisions for myself and am expected to die without life-sustaining treatment provided in accordance with prevailing standards of care”.

Interestingly, my Medical Power of Attorney says my agent should abide by any Directive to Physicians. However, my attorney did say that if my wife / agent wanted me kept alive for a bit to hang out with me, she could do so. While I would like her to honor the Directive, she can hold my hand for a while if she likes. It’s not like I’m going anywhere.

The biggest benefit of this document, in my opinion, is that I’ve signalled to everyone in the wider family that I don’t want to be kept alive when it is game over for me. That should make things easy on the missus if anyone ever questions her.

And that underscores much of the value of estate planning – it’s simply sharing your intentions and desires in advance so your family doesn’t have to guess what you would have wanted.

Declaration of Guardian

This document didn’t make a whole lot of sense to me. It names my wife (with brother backup) as “guardian” of my body and my estate, which together seem to cover the medical and financial realms. It seemed to me that those areas would already be addressed by all of the other documents I was contemplating during this legal marathon.

But my attorney pointed out that a court can also appoint a guardian for me, and a court-ordered guardian would trump any Financial or Medical Power of Attorney that I had in place. This document would clearly tell any judge that my first choice for guardian is my missus, so I’m hopeful it would help prevent a court from undoing all of my careful estate planning.

 

Why Estate Planning is Important

After I conquered all of these unknown unknowns, I realized each document could be incredibly important given the right scenario, and together, they filled in a lot of the gaps that weren’t covered by a will. What I thought originally was upselling turned out to be valuable legal advice, at least for me and my situation.

If handing out these powers and addressing the risk of being incapacitated is so important, why doesn’t this occur automatically? Why do we have to create all of these legal documents ourselves at such work and expense?

The answer is that these documents need to overcome all of the protections that have been put in place for us. It allows us to tell the world what we really want to happen when we’re incapacitated or dead and can no longer speak. Your spouse may already enjoy some of the powers you would want handed out, but what happens if you have no spouse, or he/she is incapacitated or dead when you’re ready for some help?

There are good reasons financial institutions don’t easily let people, even your spouse, access an account solely in your name. Medical providers should have strict rules in place that keep your information confidential. Serious safeguards should exist around end-of-life decisions. But these rules put in place for our protection can be huge obstacles if they block people we trust from doing something we’d desperately want them to do for us.

So I think about these estate planning documents as my chance to speak from my hospital bed (or worse) when I no longer have a voice. They’re going to make it far easier for my loved ones to do what I want done. And that, overall, is my goal with estate planning: if I’m going to burden my family with handling my affairs, I’d like to make that burden as light as possible.