Although there’s a widely held opinion that a person should have all their estate planning affairs in order by age 55, nearly half of the American population has yet to create a will, a.k.a. “Last Will And Testament.”
What’s even more troublesome is that only a staggering 18% of people aged 55 or over have all the essentials: a will, a living will, a designaton of health care surrogate, and a durable power of attorney.
We understand that discussing such issues might be sensitive and uncomfortable to some people. However, without thoroughly counseled estate planning, you’ll have no control over your possessions and their distributions, possibly leaving your loved ones with much less than you’d have desired.
A will is a legal document drafted to ensure your wishes get carried out after you pass. While most people believe that discussing this document should be left for wealthy, old, or gravely ill people, none of that is accurate.
The fact is that anyone of legal age can, and should, have a will describing their wishes and intentions regarding their possessions at the time of their passing.
This document addresses not only your tangible possessions but also anything related to your wishes at the moment of drafting, including funeral arrangements, pets, gifts, and how you would like to provide for any spouse, children, parents, friends, or charities.
Making a will requires you be of sound mind. What this means is that you must be mentally competent and not suffering from any illness or on any medicine that limits your awareness of all the property you own and all of the people you’re mentioning in your will and your relationship to them.
A living trust is another type of legal document where a person (called a settlor) designates another individual (called a trustee) to become responsible for managing their assets according to the beneficiary’s (usually a loved one or member of their families) best interests. These trusts can either be revocable or irrevocable.
Unlike wills that have to clear the courts to reach the intended beneficiaries, consuming both time and money, living trusts come into effect while the settlor is still alive. After the settlor’s passing, these assets will go to the beneficiaries’ possession or futher held in trust as described by the trust document.
The most common trusts are revocable, meaning the settlor can change them or revoke them entirely at any point in time. If the settlor creates an irrevocable trust, however, not even themselves can change them afterward.
Living trusts offer a wide range of benefits and advantages, such as:
- No need to pass through probate, saving lots of time, administrative fees, and court costs
- Wealth control, since the trust terms and conditions will specify clearly when and how your asset distribution will happen after your passing.
- Legacy protection, you can protect trust assets from your heirs’ creditors or even from the beneficiaries themselves (in the event of poor money management)
- Flexibility, given that most trusts are revocable, meaning you (as a settlor) can change them as many times as you see fit for as long as you live
A living will is a written and legal document that’s usually a part of advanced directives. These documents vary from state to state, but ultimately, they all need to follow the same guidelines:
- Being legally written
- In compliance with your state of residence’s laws
- Cover what you wish to happen in the events of becoming terminally ill, permanently unconscious, or unable to carry out your wishes
With that said, just telling your loved ones and primary care physicians how you would want them to proceed in these events is not enough – it needs to be legally binding.
Living wills are not just about end-of-life scenarios. With this document, you can set your preferences regarding extensive care and treatment, which methods you agree with, and which ones you do not. From pain management to blood transfusions and life-saving procedures, it is the ideal way to ensure your wishes get carried out.
A living will is NOT written in stone. Just as all wills, you can later change this legal document if you change your mind about some things. You can either revoke the initial living will and draft a new one or cancel it in its entirety. Bear in mind that these changes also need to be formally addressed.
Before following the instructions of a living will, doctors will need to reach the determination that you’re either permanently unconscious or terminally ill. A single doctor cannot make this ruling by themselves since it needs to be a legitimate medical fact, agreed upon by more than one medical professional.
Durable Power of Attorney and Health Care Surrogate.
A durable power of attorney (POA) is a legal document that allows a person (the principal) to appoint in advance a person who they trust (the agent) to act on their behalf and in safeguard of their best interests if the principal becomes incapable of managing their affairs.
There are two broad types of POAs, medical and financial. In Florida, a Medicial POA is called a Designation of Health Care Surrogate. Unless specifically written down, most POAs will grant the agent power over both kinds of decisions, although in some cases, it might be best to appoint different people for each purpose.
Agents can decide on the following topics:
- Medical care, including hospitals, surgeries, primary care physicians, and care providers
- Place of residence, particularly when it comes to long-term care, such as nursing homes
- Day-to-day requirements, such as dietary needs, bathing, and nursing
- Payments, debt collections, bills, tax management, and control over bank accounts and assets
- Investments, property management, and public benefits, such as Medicaid or veterans benefits
Agents cannot do the following:
- Changes on the principal’s will
- Keep making decisions on behalf of the principal after their passing
- Change the POA