This is part 2 of a continuing series that began last week with an introductory syllabus.  Today’s post about the importance of planning while you are alive and well is the first of a 3 part explanation of lifetime planning describing the issues you must consider.  Part 2 will focus on emergency documents and the role players you will need to consider.  Part 3 will describe why you must do wealth transition planning while you are alive and well, even if you think you have a small estate.

It is often said that barriers to estate planning include no one likes to think about their own demise or that there will always be time later to plan. Many people mistakenly believe they don’t have enough money to plan or that in one form or another they are already “well planned” either because they believe their children will be able to “divvy” up their assets without a problem, they have a suitable Will, or their assets will all pass by operation of law through a beneficiary designation, right of survivorship, or otherwise.  It is not my intention to convince you that you need sophisticated planning, but I do believe many people underestimate the value of planning in several important regards.

First everyone should understand the emergency plans provided by state law.  If you have not intentionally created a plan by obtaining a financial power of attorney, a health care power, a living will, and a designated HIPAA recipients, your plan may go awry at the worst time.  Some folks believe joint accounts, PODs, and beneficiary designations are sufficient to transfer their assets in accordance with their intentions.  But you may be incapacitated as the result of an accident or an end of life illness when decisions must be made about your care and bills must continue to be paid.

A joint account may solve the problem of paying your bills, but who will make health care decisions for you if you are not able to make them for yourself and more importantly, who will the medical providers talk to about your condition?  State law provides a priority that includes your spouse and then your adult children and then others interested in your welfare to give informed medical consent, but it does not prioritize among persons of the same order, i.e., all children have an equal right to make the decisions for you.

There is no state law that will allow access to your financial accounts or permit you to be placed in a suitable facility without first going through a protracted and costly judicial proceeding if you do not have written directions signed and witnessed in accordance with law. Most importantly without a validly executed living will, your loved ones and medical providers will be uncertain of your end of life instructions.  As a consequence, you and your family may endure serious great discomfort and emotional distress.

In the last installment of this extended series, I will describe the havoc wreaked by do-it-yourselfers who try to solve these issues for themselves by finding a false sense of security in using “standard” forms found online or in your state’s statutes without proper legal supervision.

Next time I will describe the pertinent questions to ask yourself in preparing to meet with your attorney for this important process.  In the meantime, make your new year’s resolution to become “well planned” as the lasting gift you leave for your loved ones.  Call me if I can help.