Planning for a Crisis

What the coronavirus teaches us is that we need to plan for the unexpected in life.  It’s comfortable to think that nothing is going to change.  Change often makes us uncomfortable, but sometimes, change is forced upon us.  Change happens whether we want it to or not.

Accidents happen.  Illnesses happen.  We need to have a plan in place to deal with the potential changes that could affect us.

A good estate plan includes a last will and testament, a financial power of attorney, and an advanced healthcare directive.  Every person over the age of eighteen should have these documents, because once you obtain the age of eighteen, no one can legally make decisions for you unless you have these documents.

While a last will is a very important document, I always tell clients that this document is for others, not you.  A Will isn’t even an effective document until you die, so a Will is for your family’s benefit, not yours.  Nevertheless, you should have a Will for your family’s benefit.

A financial power of attorney and healthcare directive are for your benefit.  Once you attain the age of eighteen, no one can make decisions for you—not your parents, not your spouse, not your children.  No one.  So, if you do not have a financial power of attorney and an advanced healthcare directive in place, then no one can make the decisions for you that need to be made.

No one could access your medical information.  No one could make medical decisions.  No one could access your bank accounts, pay your bills, sell your property.  There are a slew of important decisions we make every day, and if you were incapable of making decisions for yourself and you had failed to sign a financial power of attorney and healthcare directive, no one else could make those decisions for you.

What happens when someone fails to have these documents in place and decisions need to be made for him?  Someone would have to become his legal guardian.  A guardianship is a court procedure.  The court procedure typically involves two lawyers, two doctors, and the court.  It costs around $5,000 in total, and a guardianship is far more restrictive than a well-drafted financial power of attorney and healthcare directive.  Your guardian may have to return to court to accomplish various tasks, and each return trip to court will cost your estate more and more money.

A power of attorney and healthcare directive are documents you put in place.  You choose the terms of the documents.  You choose who you will name to make decisions for you, often called an “agent” or “proxy.”  Because the documents involve your life—your finances, your healthcare—you can set the terms by which the agent acts.  You can grant your agent broad powers, and in my opinion, you should grant your agent broad powers.

It goes without saying that you want to choose a person as your agent whom you trust, but once you choose this trustworthy person (often a family member, such as your spouse or child), you want to grant them very broad powers.

You don’t want someone (such as a bank or healthcare professional) questioning the authority granted to them through the document, and your agent not having language in the document to which he could turn that proves he has the authority to make the decision the authority for which is being questioned.

The recent global health crisis points out the need for planning.  Personally, I think the vast majority of us will make it through this crisis unscathed, but there is lesson to be learned from the crisis.  Life is very unpredictable.  Life can change very quickly and sometimes for the worse.

Take a few moments of your life to plan for the worse.  You do it, you get it over then you don’t have to think about it again.  The plan is in place, and you can move on to thinking happier thoughts.

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