WHO SHOULD HAVE AN ESTATE PLAN?
Almost everyone should have an estate plan. Believe it or not, you have an estate. Your estate consists of everything you own: cash, bank accounts, savings, investments, 401Ks, your home, all real property, and personal possessions (i.e. jewelry, and clothes), and etc.
WHAT IS ESTATE PLANNING?
Estate planning is the process of designating who will receive your assets in the event of your death or incapacity.
However, a good estate plan should also assist you with minimizing taxes, legal fees, court costs, and hopefully limit potential fighting amongst loved ones. A good estate plan, at a minimum, should address the following:
- Includes instructions for your medical care if you ever become incapacitated;
- Includes instructions for your financial management if you ever become incapacitated;
- Makes arrangements for the maintenance and support of your minor children in the event of your death; and
- Makes arrangements for the maintenance and support of other family and loved ones, who may financially dependent on you, in the event of your death.
WHAT ARE SOME ESSENTIAL DOCUMENTS IN AN ESTATE PLAN?
What is a Health Care Proxy?
What is a Living Will?
What is a Power of Attorney?
What is a Durable Power of Attorney?
What is a Last Will and Testament?
Q: What is a Health Care Proxy?
A Health Care Proxy is an instrument that allows you to designate another individual (known as a Heath Care Agent) to make health care decisions in the event you ever become of incapable of making medical decisions. A Health Care Proxy is an important estate planning tool as it allows your designated Heath Care Agent to make medical decision on your behalf immediately and without any need for Court intervention.
A Health Care Proxy can be revoked at any time. Revocation can be accomplished by advising the Health Care Provider and Heath Care Agent, orally or in writing.
A Health Care Agent is not authorized to make financial decisions on your behalf. If you want someone to assist you with financial decisions, you must have a validly executed Power of Attorney.
Copies of your Health Care Proxy should be delivered to the designated Heath Care Agent, your Health Care Providers, and/or other people close to you.
Q: What is a Living Will?
A Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding treatment.
Copies of your Living Will should be delivered to the designated Heath Care Agent, your Health Care Provider, and/or other people close to you.
Q: What is a Power of Attorney?
A Power of Attorney is a legal document that allows you to designate another individual to make decisions regarding financial matters (ie. to engage in banking transactions, certain financial transactions, business transactions, real estate transactions, and/or legal affairs) during your lifetime. The person who signs the Power of Attorney is called the Principal. The person who has been designated to act on the Principal’s behalf is called the Attorney-in-Fact.
A Power of Attorney can be terminated in several ways: (1) when a specific designated task has been accomplished (e.g. the closing of a real estate transaction); (2) by revocation of the Principal; (3) when a Principal becomes incapacitated; (4) pursuant to a Court Order; or (4) when the Principal dies.
A Power of Attorney does not authorize an Attorney-in-Fact to make medical decisions. If you want someone to assist you with medical decisions, you must have a validly executed Health Care Proxy.
Q: What is a Durable Power of Attorney?
A “Durable” Power of Attorney serves the same function as a Power of Attorney. However, as its name implies, a Durable Power of Attorney remains effective even if the Principal becomes incapacitated. A Durable Power of Attorney is an important estate planning tool as it allows the Attorney-in-Fact to manage the Principal’s financial affairs immediately and without any need for Court intervention.
A Durable Power of Attorney can be terminated in several ways: (1) by revocation of the Principal; (2) pursuant to a Court Order; or (3) when the Principal dies.
A Durable Power of Attorney does not authorize an Attorney-in-Fact to make medical decisions. Medical decisions can be made by a Health Care Agent pursuant to a validly executed Health Care Proxy.
Q: Is there an updated 2021 Power of Attorney?
On Dec. 15, 2020, Gov. Andrew Cuomo signed a bill into law that amended the New York State General Obligations Law as it relates to Powers of Attorney. The new statute came into effect on June 13, 2021.
One significant change in the 2021 enactment is the elimination of the Statutory Gift Rider which authorized an Attorney-in-Fact to make gifts. While it is still be necessary to list out the specific powers being granted as it relates to gifting, it will no longer be in a separate document but rather specific powers should be incorporated into the Power of Attorney document itself.
Another noteworthy change, in the 2021 enactment, is the requirement that the Principal’s signature must now be witnessed by a notary and two witnesses (one of whom can be the same individual serving as the notary). Under the prior 2010 law, the witness requirement existed for only the Statutory Gift Rider.
The notary and witness requirement provides extra protection to a Principal who may be the subject of elder abuse or undue influence.
Accommodating Limited Capacity – The new law sets forth a specific procedure that will allow a Principal, who possess the required mental capacity, to direct another to sign for them. For example, take an individual who is mentally sharp, but cannot hold a pen or sign their name due to a physical disability. Under the new law, so long as certain procedures are followed, this person can now have a validly executed Power of Attorney.
Q: Do I need an updated Power of Attorney?
Any Power of Attorney that was valid at the time it was executed will remain in valid. However, an outdated Power of Attorney may not include all the necessary powers so it may prudent, although not required, to sign a new Power of Attorney. It is recommended that you make an appointment with an estate planning attorney to have your existing Power of Attorney and other Estate Planning Document reviewed.
Q: What is a Last Will and Testament?
A Last Will and Testament is a legal document that communicates a person’s final wishes regarding to the disposition of property, both real and personal, after death. A properly drafted Last Will and Testament will cover several important points: (1) the nomination of an Executor who will be in charge of settling your final affairs and carrying your final wishes; (2) the identification of Beneficiaries who are the individuals (or charities) that will inherit your property and possessions after your death; (3) setting forth the powers your Executor will have; (4) setting forth the essential details concerning how your property will ultimately be transferred to your Beneficiaries; (5) establishing trusts; (6) listing funeral wishes; and (7) if you have young children, you may also nominate a Guardian(s) for your children in your Last Will and Testament.
If, at the time of your death, you do not have a Last Will and Testament, the State of New York will dictate how your assets are distributed according to the State’s Laws of Intestacy. A Last Will and Testament is one way to insure that your property will go the beneficiaries that you choose.
While Wills can serve as powerful estate planning tools, they are only effective if they are properly drafted to suit the needs of each individual. Therefore consulting with an experienced estate planning attorney is vital. Please make an appointment with an estate planning attorney to obtain a properly drafted Last Will and Testament.
WHAT ARE SOME OTHER COMMON ESTATE PLANNING DOCUMENTS?
What is a Trust?
What is a Do Not Resuscitate Order?
What is MOLST (Medical Orders for Life-Sustaining Treatment)?
What is a HIPPA Authorization?
What is a Letter of Intent?
Q: What is a Do Not Resuscitate Order?
A Do Not Resuscitate Order (DNR) is a medical order written by a doctor. It allows a patient to choose, before an emergency occurs, whether or not the patient wants cardiopulmonary resuscitation (CPR) if he/she should stop breathing or if the heart stops beating. A DNR is a decision only about CPR. It does not affect other treatments, such as pain medicine, medicines, or nutrition.
Q: What is MOLST (Medical Orders for Life-Sustaining Treatment)?
To help physicians and other health care providers discuss and convey a patient’s wishes regarding cardiopulmonary resuscitation (CPR) and other life-sustaining treatment, the NYS Department of Health has approved a physician order form DOH-5003 MOLST, which can be used statewide by health care practitioners and facilities.
The MOLST form is a bright pink medical order form signed by a New York State licensed physician or a border state physician that tells others the patient’s medical orders for life-sustaining treatment. All health care professionals must follow these medical orders as the patient moves from one location to another, unless a physician examines the patient, reviews the orders, and changes them.
The MOLST serves as a single document that contains a patient’s goals and preferences regarding:
- Resuscitation instructions when the patient has no pulse and/or is not breathing
- Instructions for intubation and mechanical ventilation when the patient has a pulse and the patient is breathing
- Treatment guidelines
- Future hospitalization and transfer
- Artificially administered fluids and nutrition
- Other instructions about treatments not listed
Under State law, the MOLST form is the only authorized form in New York State for documenting both nonhospital Do Not Resuscitate (DNR) and Do Not Intubate (DNI) orders. In addition, the form is beneficial to patients and providers as it provides specific medical orders and is recognized and used in a variety of health care settings.
Q: What is a HIPPA Authorization?
The Health Insurance Portability and Accountability Act of 1996 (HIPAA), gives the right to privacy to individuals at or above age of 12, and prohibits the release of information, even to spouses and parents. Most medical providers have refused to release information in the absence of a signed disclosure. Therefore, as part of your advanced incapacity planning, you should sign a HIPAA authorization form that allows the release of medical information to your agents, successor trustees, family or any other individuals you wish to designate.
Q: What is a Letter of Intent?
A Letter of Intent is an informal document that provides some guidance regarding your wishes about personal matters, financial matters, and details your final wishes for things you want to happen after your death. For example, you may have detailed instructions about how you want your funeral or memorial service to be performed.
Your Letter of Intent should also include a detailed list of important documents, and specify where the documents are being stored. Make a detailed list identifying each asset, including contact information, location, and account numbers for each asset. Include papers for:
- Bank accounts
- Brokerage Accounts
- Stocks, bonds and mutual funds
- Pension or retirement accounts
- Life insurance policies
- Annuities and IRAs
- Safe Deposit Boxes
- Photo IDs
- Birth and adoption certificates
- Real estate deeds
- Divorce records
Although, Letters of Intent are not legally binding, and you do not need an attorney, it is recommended as it will give your loved ones some directions to honor your final wishes.
MORE IMPORTANTLY, remember estate planning is an ongoing process. You should review and update your advanced directives and estate planning documents as your family and financial circumstances change over your lifetime.
Please contact us to schedule an appointment with an estate planning attorney to create a new Estate Plan or to have your existing Estate Plan reviewed.