1. Power of Attorney
2. Health Care Directive
3. Last Will and Testament
In Minnesota, these are what I refer to as “foundational estate planning documents” – and, everyone should have them. Why? If you want a stress-free retirement and aging process, plan ahead! If you have a family, take care of them if something happens to you, and help them care for you with documents that allow them to make decisions for you. These three important documents cover the basic issues of choosing who will speak for you if you become incapacitated and how you would like your assets/belongings distributed upon your death.
NAELA (National Academy of Elder Law Attorneys) just published a press release saying the same thing – it inspired me to write this three-part series. NAELA talked about 4 documents because some states deal with Health Care Directives differently than we do here in Minnesota, but it’s the same plea – plan ahead and make sure you have these foundational documents for living your life free from the fear that comes from wondering “what would happen if…..”
Document No. 1 Power of Attorney (POA)
(There are a number of options for a Power of Attorney, but I’m going to discuss the commonly used Statutory Short Form POA, recently revised and in use since January 1, 2014.)
This document allows you to name at least one person who can exercise authority over your finances. This is a powerful document that can be of practical use when you are fully capacitated, and essential if you lose your capacity – this is what is referred to as a “durable” power of attorney. The most important thing to understand about a POA is that you are, from the minute you execute the document, giving someone the same powers you have to exercise authority over your financial decisions. You are adding another person to the list of people who can make financial decisions rather than taking away your own power to do it and giving it away to someone else.
For example, you could avoid having to take a trip out of state to sign closing documents on a new home by allowing your “Attorney-in-Fact” (the person to whom you give the Power of Attorney) to sign on your behalf. Or, your Attorney-in-Fact could pay your bills while you are in the hospital, or decide which assets to use to pay for your long-term care.
In short, if you don’t decide for yourself by exercising your right to appoint someone, the court will decide for you – and they won’t necessarily pick the same person(s) you would! If you have capable and willing family members, the court will likely appoint them – but, which ones? The one you would choose? If you don’t have capable and willing family members, the court will appoint a professional. This is called a conservatorship. When a person has a conservator, they actually lose their power to make their own financial decisions and the conservator makes them instead.
All three of these foundational documents must be drafted and executed (signed by you and notarized and/or witnessed) while you have the capacity to make your own decisions. That means, if you wait until there is a problem, you may lose your opportunity to make them. As I’ve explained in other entries, although there are court appointed alternatives, they can be impersonal, impractical, costly and unpleasant, to say the least.
There are other kinds of Power of Attorney that can be drafted for people with particular concerns or instructions or authorities that aren’t able to be dealt with on the Statutory Short Form. An attorney can assist you with understanding which Power of Attorney you need and may draft what is necessary.
Don’t delay. A phone call to make an appointment with an Elder Law or Estate Planning Attorney can get the ball rolling. You may be surprised how reasonable the cost and how straight-forward the process.
Stay tuned for PART II (Health Care Directive) and PART III (Last Will and Testament) published next on Legallymade.com, the official blog site for Decoro Law, PLLC.This blog is written by Bridget-Michaele Reischl, Attorney DECORO LAW OFFICE, PLLC www.decorolaw.com