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life-support can be withdrawn.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
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