|
|
|
|
| Estate
Planning |
|
| |
Estate planning has traditionally
focused on minimizing estate taxes and
directing the disposition of your assets
after death. Yet, in today's modern
world, managing your affairs has become
even more complicated as issues involving
health care and personal finances, which
can arise during your lifetime, have
become increasingly more important.
Consider what would happen if you were
to suffer a catastrophic illness or
become incapable of managing your own
affairs. This situation could occur
either through a long, gradual process,
such as a deteriorating medical condition,
or through a sudden and 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, there are some estate planning
tools called advance directives
that can help in dealing with these
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. Some
decisions a durable power of attorney
can assist you with include your personal
finances, insurance policies, government
benefits, estate plans, retirement
plans, and business interests.
Health Care Decisions
In the area of health care decision-making,
you may recall the Karen Ann Quinlan
case. In 1979, the New Jersey Supreme
Court granted permission to her family
to disconnect Karen's respirator,
which her doctors believed was prolonging
her life in a vegetative state. The
case led to the enactment by various
states of Natural Death Act Declarations
(i.e., living wills).
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can be withdrawn.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,
easy to implement, and should be considered
essential estate planning
tools for all individuals, regardless
of age. In the absence of such documents,
court intervention involving a great
deal of time, expense, and possibly
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 of the greatest importance.
|
|
|
Historically, estate planning
has focused on the minimization of taxes
and the disposition of one's assets
at death. However, managing one's affairs
in the modern world has become more
complicated, and quality of life issues
(involving health care, finances, and
how critical planning decisions are
made) are becoming more important.
Consider what might happen in the
event of catastrophic illness or incapacity.
How, and by whom, would important
financial decisions be made? How,
and by whom, would important health
care decisions be made? Such an event
could be either a long gradual process
(e.g., a deteriorating medical condition)
or something which happens precipitously
(e.g., a serious accident). Estate
planning tools that can provide instructions
for certain lifetime contingencies
are called advance directives.
One mechanism that can provide for
financial decision-making is a power
of attorney. This agreement, entered
into voluntarily, grants authority
to another person to make legal decisions
on one's behalf. The person to whom
the authority is given is called the
attorney in fact (generally must be
an adult) who can act as the principal's
surrogate or agent. The powers granted
can be broad or limited in scope,
depending on the desires of the principal
(the person granting the power), and
can include such areas as insurance
transactions, estate transactions,
investment decisions, government benefits,
and retirement plan decisions.
Making the Document Binding
There are two aspects critical
to assuring maximum benefit from setting
up a power of attorney. First, the
principal must have sufficient mental
capacity at the time the document
is drawn to make it binding in law.
This means that the individual must
understand the nature and effect of
the document, much the same as required
for other legally binding documents.
Second, if you want to use a power
of attorney in the event of incapacity,
the document must be a durable power
of attorney. A durable power of attorney
will remain in full force even upon
subsequent mental incapacity of the
principal. While this may seem obvious
(the document remaining effective
when it is most needed), it was not
long ago that a power of attorney
terminated upon incapacity. Now, all
50 states have statutes providing
for a durable power of attorney. The
expressed language must convey the
idea that the powers granted in the
document will not be affected by the
principal`s subsequent disability.
In most states, there is a presumption
that a power of attorney is not intended
to be durable unless specific "durable"
language is included. Additionally,
state requirements can vary, making
familiarity withindividual state statutes
important. For example, Florida restricts
who can be the attorney in fact, limiting
the designation to a close blood relative.
Some states also require that the
document be witnessed or notarized.
Not all states recognize a springing
durable power of attorney (discussed
below).
Choosing a Trigger Mechanism
Sometimes, the principal may want
to have the power of attorney take
effect only if and when mental incapacity
occurs. In such a case, a springing
durable power of attorney can be used,
which becomes effective only upon
the occurrence of a specific contingency
(e.g., certification by a physician
that management of one's financial
affairs is no longer possible).
A springing durable power of attorney
assures that the principal will not
be relinquishing important rights
while still able to make independent
decisions. In crafting a springing
durable power of attorney, the method
of determining the triggering event
(e.g., defining mental incapacity)
should be carefully spelled out. (For
example, relying on a court determination
of incapacity would defeat one of
the benefits of using a power of attorney,
namely, avoiding court intervention.)
A durable power of attorney is generally
inexpensive, easy to implement, and
should be considered an essential
estate planning tool for all individuals,
regardless of age. In the absence
of such a document, court intervention
(with the accompanying time and expense)
may be necessary to carry out one`s
financial desires at precisely the
moment when facility and timeliness
are paramount.
|
|
|
Part I of this series looked at the
durable power of attorney as an estate
planning tool to direct financial
quality of life decisions,
designating an agent to act on one`s
behalf when one is no longer able to
do so.
However, there are other issues which
may be just as important as financial
decisions, revolving around what kinds
of health care
measures will be taken (to alleviate
suffering or prolong life) if one is
incapacitated.
How, and by whom, such health care quality
of life decisions will be made can be
addressed using additional advance directives:
living wills and health care proxies.
First, Some History
In the area of health care
decision-making, you may recall the
Karen Ann Quinlan case. In 1979, the
New Jersey Supreme Court granted permission
to the Quinlan family to discontinue
Karen's respirator which her doctors
believed was prolonging her life in
a vegetative state. This case led to
the enactment by various states of Natural
Death Act Declarations (i.e., living
wills).
More recently, in the Nancy Beth Cruzan
case (1990), the U.S. Supreme Court
affirmed that a person's right to refuse
treatment is guaranteed by the Constitution,
but held that individual states had
the right to determine the criteria
for providing or withdrawing life sustaining
treatment. (Nancy Cruzan, permanently
incapacitated from an accident, had
discussed her feelings about
prolonging life with family and friends,
but had not committed her thoughts to
writing. Missouri required clear and
convincing evidence--i.e., a written
document.) The Quinlan and Cruzan cases
suggest that instructions of a formally
appointed health care agent must be
followed, provided such directives are
consistent with individual state guidelines.
While definitions vary from state to
state, over 40 states now have living
will statutes, allowing individuals
to provide instructions regarding life
sustaining measures in the event of
a terminal illness, including (in some
states) coma or persistent vegetative
state.
Also, in 1991, the Federal Patient Self-Determination
Act was passed, requiring all Medicare
and Medicaid health care providers to
inform recipients of their rights (under
various court decisions and state statutes)
to accept or refuse medical treatment,
and of the right to set up advance health
care directives.
Living Wills vs. Health Care Proxies
A living will is a
set of instructions
for a health care provider, stipulating
the extent to which measures should
be taken (consistent with state statutes)
to maintain one's life, should incapacitation
render the person unable to express
his or her wishes. A health
care proxy (also called a health
care power of attorney in some states)
appoints an agent to
make any and all health care decisions,
in effect implementing instructions,
on one's behalf in the event of incapacity
(a life threatening condition, or where
the individual is unconscious and a
treatment decision must be made).
Since the health care proxy grants decision-making
power to a surrogate, its scope is broader
than the living will which simply states
a person's wishes in the face of terminal
illness. The documents may be drawn
separately, or the living will may be
incorporated into the health care proxy,
depending on state law. Both directives
come into play only when the principal
is unable to make health care decisions
for him or herself.
Up until that point, the individual
maintains decision-making authority
with respect to health care. Usually,
an individual can change or revoke both
directives at any time. Some states
have also enacted Default Surrogate
Decision Making Statutes which
define a priority of individuals who
are empowered to act on behalf of a
person who did not execute advance directives
prior to incompetency.
Into the Future
These quality of life issues have become
further complicated by the controversy
surrounding the physician-assisted death
movement and ongoing "Death with
Dignity" voter initiatives. (One
particularly important unresolved issue
which could affect the use of living
wills is the definition of "suicide"
for insurance purposes.)
Despite such controversies, not only
are one's personal wishes at stake,
but also the potential emotional and
financial burden placed on family members
by a medical condition with no hope
of recovery. Advance directives
can allow an individual to maintain
autonomy, while providing specific instructions
to assure that his or her wishes are
carried out to the fullest extent possible.
|
|
|
|
|
3040
Post Oak Blvd Suite 400, Houston, TX 77056
Phone: 281-220-2700 Fax: 713-968-0125 Email: rray@wealthdesigngroup.net
Securities
products and services are offered through Registered
Representatives of Park Avenue Securities LLC
(PAS). Wealth Design Group is not an affiliate
or subsidiary of PAS.
PAS is a member FINRA/SIPC.
Guardian
and PAS, its representatives and employees do
not give tax or legal advice
The
Registered Representative is securities licensed
in Texas and the material is strictly intended
for individuals residing in those states. No offers
may be made or accepted from any resident outside
these specified states.
The
information or opinions contained in this Internet
site should not be construed by any consumer and/or
prospective client as an offer to sell or the
solicitation of an offer to buy any particular
investment product. The information contained
herein is directed solely to those individuals
who reside in jurisdictions in which the representative
is registered in the state where the consumer
and/or prospective client reside. Any subsequent
direct communication with a consumer and/or prospective
client shall only be conducted by a representative
that is registered in the state where the consumer
and/or prospective client reside.
This
Internet site may provide links to other sites
for your convenience in locating related information
and services. This Agency, The Guardian Life Insurance
Company of American (Guardian) and Park Avenue
Securities, LLC (PAS) do not maintain these other
sites and have no control over the organization
that maintain the sites or the information, products
or services these organizations provide. This
Agency, Guardian and PAS cannot make any representation
or warranty as to the accuracy, timeliness, suitability,
this Internet site or incorporated herein, and
take no responsibility therefore. The Agency,
Guardian and PAS do not recommend or endorse these
organizations or their products or services in
any way. |
| |
|
| |
|
|
+68.23