A basic estate plan covers incapacity planning and the disposition of property upon death. Most individuals when thinking about estate planning planning only focus on the later part–death. When I meet with clients, I always start with the incapacity planning first. The initial focus should be on matters that can help you while you are still alive. If you are unable to make decisions about your property and your health care, it is important that you have legally delegated the authority to an agent to make those decisions on your behalf. Exploration of the the various ways of transferring property upon your death comes next. The basic tools for accomplishing these goals are the power of attorney for finances, the power of attorney for health care, and a will.
INCAPACITY PLANNING FOR HEALTH CARE DECISIONS
I use two planning tools for health care matters: a HIPAA authorization and a Health Care Power of Attorney and Living Will. The HIPAA authorization is required due to the passage in Congress of a law entitled the Health Insurance Portability and Accountability Act. This law is referred to as HIPAA. You would never know from the title of the law that it includes the provisions under which your health information may be released. This authorization is prepared in order for you to authorize individuals access to your medical records and to enable health care providers to discuss your protected health care information with those you designate in this document. In most cases you will want to list your spouse and adult children if applicable. You may also want to expand this list to include parents and friends. This authorization is limited to making information available to the authorized individuals. It does not provide the authority to make decisions on your behalf. The Health Care Power of Attorney and Living Will serves two basic purposes: it names who can make health care decisions for you if you are unable to make them for yourself and it states your preferences for end of life treatment. You may also wish to address organ donation. Even though forms for both a Health Care Power of Attorney and Living Will are available through the State of Wisconsin, many pitfalls exist in their proper preparation.
INCAPACITY PLANNING FOR FINANCIAL DECISIONS
Having a financial power of attorney allows you to name an agent to make financial decisions on your behalf. Without this document a guardianship would be necessary to grant this authority if you are unable to make decisions for yourself. During the planning process, you select the best agent and alternate agents to serve in this role. The extent of the authority whether limited or very broad is also determined. As an individual ages, additional powers may also be selected to provide for Medicaid planning. Again, basic forms available through the State of Wisconsin can provide a false sense of security since they are lacking in many provisions an experience estate planner would include.
PLANNING FOR THE TRANSFER OF PROPERTY UPON DEATH
Property is usually transferred upon death through the use of one or more of the following tools: will, joint tenancy, beneficiary designation including payable upon death or transfer upon death directives, and trusts. A will is commonly the starting point for families with young children as the appropriate document to name guardians. Absent that need, deciding the disposition of your property upon your death and the nomination of a personal representative to administer your estate are the will’s other basic purposes. Depending on your family situation, a will may or may not be an appropriate planning tool for you. Many people believe that a will is the appropriate starting point because they are familiar with the basic concept of getting a will.
In conclusion, most planning for incapacity involves the same documents. The complexity of these documents (powers of attorney for health care and property) varies based upon your situation. The decision, however, as to whether a will is the appropriate tool upon which to transfer property upon death is not very straightforward. Whether a will should be used in your estate plan should only be determined with the assistance of a experience estate planning attorney.