Almost all people in their lifetimes will have some interaction with the basic tools of estate planning: a Will, a Power of Attorney, and a Living Will. Whether planning for ourselves or being designated as an executor, an agent, or a medical surrogate, such preparation, while not pleasant to contemplate, is necessary and wise to make sure our affairs are carried out as we wish when we are unable to communicate our desires directly. This article will discuss each of these basic tools.
A. The Will
A Will is a written document which identifies who will receive your money and your property after you die. Other than a Trust (which tool is beyond the scope of this article), a Will is the only way most individuals can have any say about “who gets what” after that individual passes on. This includes not only family and friends but such things as gifts to charities and religious organizations.
However, if you do not have a Will (a state in which you are called “intestate”), the government, through a specific law called the intestacy law, mandates who gets your property. If there is a surviving spouse or surviving “issue” (children, grandchildren and so on) such individuals will generally receive all or a substantial portion of the property of the deceased. However, if there is no surviving spouse or issue, and there is no Will, the law passes the decedent’s property to others in the order of the closeness of their family relationship (the “degree of consanguinity”) to the deceased. Although certain variations do exist, in general, the order in which family members inherit is: parents, brothers/sisters, nieces/nephews, grandparents, and then aunts/uncles. In the absence of anyone closer, relatives as distant as the children and grandchildren of an aunt or uncle may be entitled to some portion of a decedent’s estate. Finally, in the rare instance in which no relatives exist within these family categories, an individual’s money and property will “escheat.” Escheat means that the deceased’s estate becomes the property of the Commonwealth. This situation can be avoided with a properly executed Will, by which property can pass not only to one’s family, but to any person or any corporate entity to whom the person making the Will (called the “testator”) desires.
In addition to directing who gets an individual’s property, a Will can specify who does not get property or who does not get property directly. This may be of great importance in situations where individuals who might otherwise inherit (by will or by intestacy) are incompetent to manage their own affairs whether because of physical disability, mental or emotional incapacity, youth or because they are subject to the influence of designing persons or even drugs or alcohol. A Will can specify, for any reason or for no reason, that a certain individual or entity shall not inherit anything. Additionally, a Will can create a Trust (called a “Testamentary Trust”) and appoint a Trustee, who would then manage any inherited money or property for the benefit of such a disabled or incapacitated beneficiary. A Will can also designate an Executor or Executrix who is charged with managing the estate by paying any debts and transferring the remaining assets of the estate to the beneficiaries.
As you can see, a basic Will is a useful tool for your estate planning in all but the most limited and simple of situations. A consultation with an attorney would be useful to find out how the above general information would specifically apply to you.
B. The Power of Attorney
A Power of Attorney (“POA”) is a document by which one person (the “Principal”) authorizes another person (the “Agent”) to take various actions on the first person’s behalf. POAs are used for a variety of purposes and in a variety of contexts.
A POA could be used for very limited purposes. This is known as a “Special” or “Limited” POA. For example, a Principal could authorize her Agent to take action regarding only a single real estate or banking transaction. On the other hand, a Principal could issue a very broad POA permitting the Agent to handle any aspect of the Principal’s business or personal matters. Such a broad POA is referred to as a “General” POA.
Typically, a POA becomes effective the moment when both the Principal signs it and the Agent signs an “acknowledgment” of it. As a result, the Agent may be authorized to act, even though the Principal also could continue to act for himself if he is able to and chooses to do so.
By far the most common type of POA, useful to the largest number of people, is known as a “General Durable Power of Attorney”. As a General POA, it grants very broad current powers to the Agent. In addition, however, as a “Durable” POA the Agent may continue to act on behalf of the Principal even after the Principal has become mentally or physically incapacitated such that she cannot act on her own behalf. This is a very important and useful capability. For example, if an elderly person becomes incapacitated by Alzheimer’s disease or other dementia, a child or other caregiver possessing a General Durable POA can perform necessary tasks, such as banking, authorization of medical care, and management of governmental services, which would be impossible to do without the POA. Indeed, not having a Durable POA has on countless occasions prevented family or friends from taking needed action on behalf of an incapacitated person, and necessitated expensive and time-consuming court action to receive permission to act on the incapacitated person’s behalf. The alternative is a “Springing” POA, which only becomes effective upon the occurrence of a certain event, such as the incapacity itself. This Springing POA is, by its nature, self-limiting, and not as useful a tool for general estate planning, since there may be some question as to whether the principal is truly incapacitated, calling into question whether the POA is valid at any given time.
Finally, it is important to remember that a POA is a powerful tool which can and has in the past been subject to abuse. On far more than one occasion, an Agent under POA, whether a family member, friend or hired professional, has wrongfully acted to advance the Agent’s personal interests to the detriment of the interests of the Principal. Accordingly, while a POA typically establishes a convenient, useful, and often necessary, way to take action for the benefit of the Principal, it is of the utmost importance to select an Agent under POA who will be readily available and who is reliable, honest and trustworthy.
C. The Living Will
The term “Living Will” is commonly used, albeit inexactly, to refer to a class of healthcare related documents which also includes a “Declaration,” an “Advance Medical Directive,” an “Advance Health Care Directive,” and a “Healthcare Power of Attorney.” The basic purpose for all of these documents is similar. They all involve methods of informing and directing doctors and other members of the medical profession of which treatments and procedures you do or do not want to be used, if you are in a hospital, in a terminal condition or a state of permanent unconsciousness, and cannot speak or otherwise communicate for yourself.
The form of the Living Will, the Declaration and the Advance Health Care Directive each are very similar to the others. Each of these documents provides an individual the ability directly to communicate their treatment wishes to their doctor. Most commonly, these documents are used to clarify which treatments and procedures an individual does not want to receive when confined in a hospital with no realistic prospect of recovery. Such choices frequently are referred to as refusing “heroic measures” when such measures serve only to prolong the process of an individual’s dying. Some of the heroic measures which most commonly are declined include cardiac resuscitation, mechanical respiration, tube feeding, and kidney dialysis. There are however, any number of other treatments and procedures which an individual may identify.
These documents also typically appoint a “healthcare agent” or “healthcare surrogate” to direct doctors expressly to follow the individual’s previously recorded treatment wishes. Making healthcare decisions for another, which may include choices between life and death, may well become difficult and stressful. Common choices for this position include a spouse, an adult child, another family member or a very close friend. In all cases however, it is critical to choose an agent or surrogate who is mature, emotionally stable and strong, who knows you well and can be trusted to follow your wishes.
Regarding a Healthcare Power of Attorney, the prime difference between it and the Living Will type documents, is that an individual formally grants his or her healthcare agent or surrogate the full authority of an agent under a power of attorney. This type of document may, if desired, authorize the healthcare agent not only to direct the withholding of specific treatments, but also to direct, among other things, that specific treatments be authorized, that an individual be admitted to a medical, nursing, residential or similar facility, or, expressly to request or concur with a “no-code” (Do Not Resuscitate) order by an attending or treating physician.
These healthcare documents are available for the benefit of individuals seeking peace of mind that they will not be kept alive, indefinitely, in a vegetative state. It is important to remember, however, that if an individual is awake and able to communicate, that his or her wishes always will supersede the directives of any written documents. No one will be left untreated if he or she can and does specifically request that treatments be administered, no matter what is contained in the Advance Directive or Healthcare POA. Finally, everyone should be aware that if you have not executed one of these healthcare type documents, all doctors and healthcare providers are ethically and legally obligated to administer all available and medically indicated treatments and procedures, indefinitely, whether or not you are in a vegetative state.
It is plain to see that estate planning even on a basic level requires careful consideration and forethought. Although there are plenty of cheap estate planning forms which can be purchased online or at stores, you get what you pay for. Off-the-shelf Wills, Powers of Attorney, and Living Wills cannot substitute for the informed professional judgment of a Pennsylvania estate planning lawyer. To make sure that your particular situation is handled correctly, so that you have the greatest peace of mind, consultation with an attorney is key.