Legal planning for independent living in your golden years
When properly handled, legal planning can help ensure that your wishes for health care and end-of-life care are followed. Three documents - a will or trust, a durable power of attorney, and an advance health care directive (or advance medical directive) - provide the basis for good legal planning.
Like many people, you may already have at least one of these documents. But you may have doubted the need for the others. All three should be discussed and written while you are competent enough to handle your affairs and, preferably, long before any need for them arises.
Wills and trusts
Wills and trusts permit you to distribute your assets and belongings after your death as you see fit. But there are a few important differences between them.
Trusts allow you to officially gather your assets, including your house, money, stocks, and so forth, before your death and place them in a legal entity. While you are alive, you are the trust's beneficiary. You may control any distributions yourself or through trustees whom you elect to carry out your wishes at a time or point that you specify. When you die, the trustees distribute remaining assets to the other beneficiaries you have chosen.
The wishes you relay through a trust can take effect today, if you like, or upon a triggering event, such as when you can no longer handle your own affairs due to mental or physical incapacity. On the other hand, the wishes you relay through a will take effect only upon your death. Trusts have implications for Medicaid planning that should be discussed with a lawyer experienced in elder issues.
Durable powers of attorney
A durable power of attorney may help if you're having trouble with certain aspects of your life, such as your finances or health care, or when you can't manage them any longer. This document allows you to appoint an agent, often a trusted relative or friend, to handle such things.
A durable power of attorney isn't as far-reaching or as involved as a trust. It can be written so that it starts as soon as you sign it or it can go into effect at some point in the future, for example, if you become incapacitated. The AARP likens a durable power of attorney to giving a second set of keys to someone you trust. You can continue to use the keys yourself and, if it ever proves necessary, take back the extra set of keys by revoking the power of attorney.
A durable power of attorney permits you to delegate certain responsibilities that you're having trouble fulfilling, such as managing your money or paying your bills. If you become incapacitated, the document can give your agent the right to continue handling these duties. The authority you hand over can be very narrow or quite broad. You might give someone the authority to sell your car or to make all your financial decisions, including selling your home, managing your assets, and dealing with the Internal Revenue Service.
Why is a durable power of attorney such an important document? If you become incapacitated or incompetent without one, your family and friends cannot make many important financial decisions on your behalf. Nor can they do crucial Medicaid planning. Anyone who wanted to do these things would have to go to court and be appointed your guardian. This is a time-consuming, often costly process that may give authority to someone you wouldn't have chosen.
Advance health care directives
You can help ensure that your health care wishes are known and respected through advanced health care directives. These directives address how aggressively you want doctors to pursue life-sustaining measures on your behalf and whether your quality of life or comfort should be paramount concerns. Two common advance directives are:
- A "living will," which states your medical wishes if you become mentally or physically unable to make decisions yourself.
- A durable power of attorney for health care or "health care proxy," which lets you name a person who will act on your behalf.
State laws vary. In some states, one type of directive has advantages over another. It may also be possible to combine elements of each. Be sure you comply with the law in your state, and remember that guidelines may differ if you spend substantial time in different states. A local hospital, hospice, or seniors' organization may have staff members who can help you prepare an advanced directive. Or speak with a lawyer qualified in elder law.
Questions advance directives can help you answer include:
- If you were in a coma with little chance of regaining awareness and mental function, would you want a respirator to keep you breathing?
- Would you want to be given fluid and nutrients through a tube placed in your veins or stomach?
- Should cardiopulmonary resuscitation (CPR) be performed if your heart stops beating?
Though it's impossible to see into the future and know what medical treatments you're going to need, if any, these documents help you sort through your wishes for end-of-life care.
August 2003 Update