Are You Covered?
By Jennifer Peck
As we head into fall, it’s a great time to clean up the yard and flower beds and get the house ready for winter. It’s also a great time to “clean up” your estate planning. As we age, many things change.
Family changes with births, marriages, divorces and death. Finances change as we first save for and then spend for college and/or retirement. Health changes as we age and deal with complicated ailments. Your old estate plan might be out of date, or maybe you don’t have one.
Get Started
Here are two of the most common — and often most important — estate planning documents to consider creating or, if your current ones are out of date, updating.
The first document, the durable financial power of attorney, authorizes someone you trust (often a spouse or child) to handle your finances.
In this document, you name an agent whom you authorize to pay your bills, sign checks, file your taxes, and generally handle your finances. If you become incapacitated (unable to handle your financial affairs), your agent under the durable financial power of attorney can easily step in to handle things for you.
What happens if you do not have a durable financial power of attorney and you become incapacitated for any reason (stroke, accident, dementia, etc.)? It can be a financial disaster. No one would be authorized to withdraw money from your IRAs or 401(k), to sell your house or to endorse and deposit checks.
The result would be that your spouse or child would have to request to become your guardian through the county probate court, which is costly, time-consuming and usually requires hiring an attorney. Think of it as going through probate while you’re still alive. Most people try to avoid probate at death, so why would someone want that during life?
Next Step
The health care power of attorney is the second document. This document allows you to authorize someone to make health care decisions for you if you cannot make them on your own due to an accident, Alzheimer’s disease, a stroke or similar medical conditions.
Doctors generally cannot treat you or perform medical procedures on you without consent. Your spouse or children cannot tell doctors what to do without legal authority. You must give someone the legal authority, in writing, to make health decisions for you if you are unable to make your own decisions or give consent. Without such a document, if you become incapacitated, a guardianship would have to be established, as discussed previously.
If you haven’t made financial and health care durable powers of attorney — or you have them but it has been years since you have looked at them — do yourself and your loved ones a favor; do a fall cleanup on your estate plan. Consult an attorney for specifics.
Jennifer E. Peck is a partner at the law firm of Solomon, Steiner & Peck, Ltd., ssandplaw.com, in Mayfield Heights. She concentrates in the areas of estate and Medicaid planning and probate and trust administration.
