A NIGHTMARE THAT CAN HAPPEN TO ANYONE
Documents Everyone Needs Right Now
Written by: Neil O. Anderson, Esq.
The Nightmare
Rebecca and Joseph are a happily married young couple who recently had a baby girl. They, in their mid-twenties, have been married for two years and together bought a small house to begin their family.
Joseph is a software sales associate who works on commissions. He has some good months and some bad months. Rebecca recently graduated from graduate school. She put herself through school while working at a small accounting firm for over four years. With her new degree, her company recently promoted her. She has a modest salary and excellent benefits. With finances a bit tight, they used an online service to do a Will, figuring it was all they needed at this stage. They wished to pass on what little they had to their daughter. Rebecca manages the household finances, a job Joseph has little affinity for. She has used a bank account for many years; it is solely in her name. Her employer automatically deposits her pay into this account.
Rebecca is in a terrible car crash on her way home from a “girls’ night out” with a few of her college friends. She will survive, and the doctors are optimistic that she will make a full recovery. However, they need to induce a coma to reduce swelling in her brain. With Rebecca incapacitated for an indefinite period, Joseph needs to take time off work to care for the baby.
The household finances also fall on his lap. He visits Rebecca’s bank to explain the situation, expecting they will help him. At his appointment with the bank manager, the manager asks Joseph if he has Power of Attorney? Joseph states he does not; the bank manager apologizes to Joseph but cannot grant him access to his wife’s name account. Joseph cannot access his family’s primary bank account.
Joseph has no income coming in and no authority to manage household financial affairs. Does this sound like a nightmare? It is, but it is one that was avoidable.
Most Americans fail to plan their estates.
Life is fragile. COVID has undoubtedly taught us this. Life can turn upside down, whether a pandemic, car accident, workplace injury, slip-on icy walkway, or other occurrences beyond our control. None of these are eventualities, just possibilities. It is essential to prepare for these possibilities, especially when it concerns who will make decisions when we are most vulnerable.
A recent CBS News poll indicated 60% of Americans do not even have a will, which has not changed in years. While the percentage figures vary, this recent poll mirrors many others, including Gallup. Many people equate a last will as enough to meet their estate planning needs. These misconceptions prevent many people from having essential documents important for any adult at any stage that protect us and provide us with safeguards when we need them. A Will takes effect after you die and is mainly concerned with distributing your assets. With many people living paycheck to paycheck and owning few assets, it is no wonder many people do no estate planning at all. Many of us fail to realize the value of estate planning in life and the critical protections a good estate plan affords us.
Power of Attorney Documents
Power of attorney documents allows you (commonly referred to as the “principal”) to grant another person (commonly referred to as an “attorney in fact,” “agent,” or “proxy”) the authority to make important life decisions and manage affairs on your behalf. This person should be someone you trust implicitly to act on your behalf in good faith. State-specific laws may vary, so it is essential to work with a dedicated professional to prepare and explain the documents when creating these documents. Many married couples reciprocally name one another as agents to avoid nightmares like described above.
There are different power of attorney documents that grant various power levels to an agent. They accomplish multiple things. Here are some standard documents that may be of service to you during a time of need.
Limited Power of Attorney: A limited or special power of attorney gives an agent control over a defined task or set of functions, but not the unlimited capacity to manage your affairs.
Durable Power of Attorney: A Durable Power of Attorney provides an agent with much broader powers. A Durable Power of Attorney grants an agent carte Blanche the ability to manage your financial affairs and decisions. Had Joseph and Rebecca had a Durable Power of Attorney in place, they could avoid the situation Joseph now faces.
A Spin on the Nightmare
Rebecca takes a turn for the worse. While her early prognosis was favorable, she experienced complications. There is little hope she will recover. The doctors need to put her on life support. Joseph knows his wife does not want this. Rebecca’s Mom, Dad, and siblings wish to hold on to hope and believe she should be on life support. Joseph and Rebecca’s family fight. Rebecca gave none of them the authority to act on her behalf. What happens?
Health Care Proxy: A Health Care Proxy is similar to a Durable Power of Attorney. It enables the agent to make healthcare-related decisions if you are mentally or physically incapacitated or compromised. It is always a good idea to have more control over when an agent may act on your behalf. Typically, a physician makes such a determination before a Health Care Proxy goes into effect. Your Health Care Proxy must be as expansive as possible to not rely on a doctor to take effect. If Rebecca and Joseph had this document in place, they could have ensured that the decisions they faced were made by a person they chose.
Living Will: A Living Will is a set of advance directives that provide caretakers, doctors, and your healthcare agent legal, written instructions on your preferences for medical care if you are near the end of life. It is a complementary document with the Health Care Proxy, holding the Health Care Proxy accountable to make the same decisions you would. Had Rebecca had a Living Will, she could have avoided the strife and conflict her family now faces.
Work With an Attorney
There are many Do It Yourself estate planning services online. These can be budget-friendly. Unfortunately, they do not always account for variances in state-specific laws, do not personalize according to individual circumstances, are not always updated with current law, and leave too much room for error. If you require an estate plan or need to update an existing plan, it is a great idea to work with an attorney specializing in estate planning to craft the perfect plan.
DISCLAIMER: This blog is not meant as a substitute for legal advice. The content intends to provide an overview of the subject matter covered and is educational and informational only. This presentation creates no attorney-client relationship. Don’t hesitate to contact an estate planning attorney if you wish to obtain legal advice and services.
