When it comes to long-term planning, everyone’s family and financial situation is unique. There is no “one-size-fits-all” formula that applies to the masses, which is why it is so important to obtain advice from an experienced estate planning attorney about your particular circumstances.  However, there are some basic estate plan documents that every adult should create and update every three to five years, or whenever a major life change occurs.  I often refer to these documents collectively as “the-don’t-leave-home-without-it” plan. Here are the five essential estate plan documents.

1. Durable Power of Attorney. A durable Power of Attorney is used to appoint a person to act on your behalf with respect to your financial affairs. The person who creates the Power of Attorney is called the “principal,” and the person who is appointed to serve is called the “attorney-in-fact.”   The term “durable” means that the Power of Attorney will remain in effect even if the principal becomes incapacitated.  The purpose of a durable Power of Attorney is to authorize someone to handle tax matters, sign checks, access financial accounts, sell a car, make decisions about investments, manage retirement accounts and enter into contracts on behalf of the principal most often in a situation where the principal is ill, injured or incapacitated.  In situations where a person is incapacitated and has not created a durable Power of Attorney, family members must file a petition with the Probate Court and ask to be appointed as the incapacitated individual’s conservator in order to obtain authority over financial assets and decision making.  This is expensive, time consuming, and requires a public proceeding. Plus, the Court may appoint someone who you would not have wanted to serve in that position.

2. Health Care Proxy. A Health Care Proxy is the legal document used in Massachusetts to appoint a person to make health care decisions on behalf of another.  The person signing the Health Care Proxy is called the “principal.”   The appointed person is called the “Health Care Agent.” It is a good idea to appoint one or more alternate health care agents to serve in case the primary agent is unavailable. The Health Care Proxy is by law a “springing” document.  That means that the authority of the Health Care Agent does not arise until the principal’s attending physician determines that the principal lacks the capacity to make or communicate health care decisions.  Once that determination is made, the Health Care Agent will have the authority to confer with doctors, nurses and other caregivers, have access to medical records, and will be able to make all medical decisions.

3. HIPAA Authorization.   As noted above, the authority of the Health Care Agent to make decisions about your care, gain access to your medical records, or obtain information from your doctor or other caregivers arises only after your physician has made a determination that you are not able to make or communicate health care decisions yourself.  While it makes sense that no one should be able to make health care decisions for someone who is capable of making his own decisions, when someone is ill or elderly, it can be helpful if family members are able to consult with doctors and other caregivers. However, the federal Health Insurance Portability and Accountability Act (HIPAA) imposes monetary fines on caregivers who disclose medical information without authorization to do so.  While this sounds like a good idea, unfortunately it can result in family members being denied any information about a loved one’s status.  A HIPAA Authorization is used to list the people you would want your doctors to speak with in the event you are ill.

4. Last Will and Testament.    It may be surprising to readers that I did not list a Will as the number one “don’t-leave-home-without-it” document.  The fact is, for many people, a Will is not the most important estate plan document.  Don’t misunderstand me – I definitely advise clients that they should create a Will as part of their estate plan.   However, a Will only controls the distribution of probate assets, which are accounts or property titled in a person’s name alone and for which there is no designated beneficiary.  Many married couples have no probate assets when one spouse dies because all of the assets are either jointly owned, held in a trust, or the surviving spouse is named as the beneficiary of assets such as IRAs, life insurance and annuities.   Even if you plan to leave no probate assets, a Will is still recommended, as you may not be able to control whether you have probate assets. For example, your employer may owe you salary or vacation pay, your estate may receive a refund on your car insurance or health insurance premiums, you may be owed money on a contract, etc.  Also, your Will is the document used to appoint the Personal Representative (formerly called Executor) of your estate.  Your Personal Representative is usually charged with the task of distributing your tangible personal property and filing final income tax returns.  Lastly, if you have minor children, you would name the individuals who you want to serve as guardian and conservator of your children in your Will.

5. Living Will.    A Living Will is the document used to express a person’s wish that no extraordinary measures or artificial means be used to prolong life in circumstances where the individual is suffering from a fatal or terminal illness and where such measures would not improve the quality of life.  We do not have a Living Will law in Massachusetts, meaning that your physician will not act on the wishes you express in your Living Will, but will only take direction from your health care agent named in your Health Care Proxy regarding these types of decisions.  Despite that, many people choose to sign a Living Will because they want to give their health care agent and other family members guidance regarding end-of-life decisions if they are not able to make those decisions for themselves.

While no one likes to think about these types of situations, it’s important to keep in mind that creating or updating these documents now will help alleviate worry later on and allow you to focus on your loved ones — not unfinished administrative work.  Everyone’s situation is different and your estate plan is no doubt very different than your neighbor’s or your sister’s plan. Consult with a qualified estate planning attorney to make sure these documents are reflective of your own needs, wishes, and goals.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020. 

May 2016