Friday, August 17, 2012
Legal Documents That Every (Responsible) Adult Should Have
If you are like most people, you probably don't give a lot of thought as to end-of-life or what I will call "special circumstances" documents. Most of us are busy enough worrying over work, getting kids to little-league practice, and unfortunately for many, figuring out how to pay this month's bills. We often believe that we will have time down the road to take care of things like our Will, Living Will, etc. However, while death and taxes are both certainties, we only know the due date for one. Because of this, it is important that we plan accordingly now, so that we, and those we leave behind, may enjoy the blessings of the future. Here are three legal documents that every adult should have, and a couple of others that may be useful, in special circumstances.
Will (or more formally, Last Will & Testament) -
Most people without a will cite one of two reasons. First, they argue that they don't have much in the bank and they don't own any property so there is nothing to "give away." A will's primary function may indeed be to devise and dispose of the deceased's (testator's) property, but there are other important functions of a will. Most importantly, if there is a minor child of the testator, unless the will names a guardian to take over the parental duties of that child, a court-battle could ensue. The simple act of having a will and naming a guardian within that will, can save hundreds or thousands of dollars in legal fees, and more importantly, the heartache and strain a legal fight can cause for surviving family members and the child or children themselves.
Second, many believe that if they have no property and no children, a will serves no purpose. However, what may be true today may not be true a year from now. After getting married, having children, buying a house, or any of the other major life changes we encounter, the last thing people tend to do is run down to their attorney's office and execute important legal documents. They are busy enjoying their new lives. By executing a will now, before those things happen, most future problems can be eliminated, even if you don't know what property you may later acquire, or the name of your future wife or kids. If nothing else, because of state law provisions and attorney fees, not having a will can cost your surviving loved ones substantially more in the event probating the estate becomes necessary. Investing a couple hundred dollars now can save thousands after you're gone.
Living Will (or Advance Directive) -
Most of us remember the Terri Schiavo case from 2005. After she fell into a prolonged vegetative state, her husband and parents fought in court over whether she should be taken off of life support. After 7 years and 14 appeals, her feeding tube was finally removed for the final time and she passed away. The reason I bring up Ms. Schiavo is to illustrate how a simple legal document could have saved some of the pain that both sides must have gone through in litigating this for so long. The court wasn't easily able to determine whether Ms. Shiavo would have wanted her feeding tube removed or not because she had never executed a Living Will. This important document simply asks a series of questions about whether the signor wishes to receive certain life sustaining treatments in the event he or she is unable to speak for him or herself. Everyone should have a Living Will.
Medical Power of Attorney/Healthcare Proxy -
This document is used to name a person that will be authorized to make medical decisions on your behalf in the event that you are unable to speak for yourself. Unlike the Living Will above, this is not just for permanently unconscious situations. It may be used while suffering from a temporary ailment, which nonetheless, renders you unable to communicate with your doctor. Everyone should have a document naming a healthcare proxy, and this can often be done within the same document as the Living Will.
Durable Power of Attorney -
In 2012, Alabama, the state in which I practice law, passed and codified legislation radically changing many aspects of Power of Attorney (or POA) law. POAs executed prior to 2012 in Alabama are still valid, as long as they were valid under previous law. But new POAs need to comply with this new legislation. You will need to make sure that the POA document you use, complies with your state's laws. In essence, this document authorizes another person (called your agent) to handle your personal or business affairs, such as check and bank transactions, signing contracts, conveying real estate, executing income tax forms, etc. It is possible to grant your agent a "general" power, allowing them to handle most matters on your behalf or any of several "specific" powers. While POAs are an important tool for many people, they are not for everybody, and great care should be taken to avoid granting a POA to someone you do not trust completely. By definition, you are giving great power over your life and finances to another person, and such a decision should not be taken lightly.
Trust Instrument -
Revocable and/or Irrevocable trusts can be an important aspect of your estate planning. This is one of my "special circumstances" documents, and like the Power of Attorney above, may not be for everybody. It is typically for somewhat wealthy individuals who are trying to avoid estate tax and probate implications associated with death. Unfortunately, for most of us a trust may not be useful, however it is worth discussing with your attorney or estate planner.
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Posted by Rene at 2:47 PM