Caring.com produces an annual survey showing how we are doing in terms of creating and maintaining a Personal or Family Contingency Plan™ (my words – estate plan = their words).
The 2021 survey, states that “while the COVID-19 pandemic has increased people’s desire to get a will (35% saw a greater need), the overall percentage of people with a will hasn’t changed since last year – 2 out of 3 still don’t have crucial estate planning documents.”(1) (emphasis added)
The Top Reasons People Don’t Have a Plan (2):
• I Haven’t Gotten Around To It;
• I Don’t Have Enough Assets To Leave To Anyone;
• It’s Too Expensive To Set Up; and
• I Don’t Know How To Get A [Plan]
This blog post will deal with the first bullet point, subsequent blog posts will address the other points.
A basic plan from an estate planning attorney generally includes the following:
• A Power of Attorney;
• A Health Care Proxy;
• A Living Will/Advanced Directive;
• A Last Will & Testament
2 out of 3 of us still don’t have crucial estate planning documents, since we “haven’t got around to it.” This is actually a misstatement.
We DO have a plan. For a resident of Massachusetts, the Commonwealth has designed one for us under its Probate and Trust laws. What does that look like while “we are getting around to it?”
Let’s say COVID-19 inspired you to buy a Peleton bike and you are religious about your daily workouts. One day you are on a particularly good exercise high and in your euphoria, don’t see the free weights on the floor, you trip and fall, seriously breaking something and becoming unconscious. You are checked into a hospital. Let’s say you are in and out of consciousness. Let’s also say you are in the process of trying to refinance your house or file your taxes and forms need to be signed during your hospital stay. You may not be conscious or lucid enough to handle that transaction…the clock is ticking.
A Power of Attorney functions as a financial/legal permission slip. With a Power of Attorney, you have named an agent to act in your stead if you cannot take care of financial or legal transactions for yourself. If you try the Commonwealth’s solution, you need to be declared incapacitated and a conservator needs to be appointed. That is an incredibly intrusive and more expensive process than having a Power of Attorney in place. Also, it will likely take too much time to get in place and your refinancing will have fallen through and tax interest and penalties are accruing daily.
A Health Care Proxy functions as a medical permission slip. Let’s stay in that Peleton-induced hospital scenario. Without this document in place, if you are unconscious or unable to adequately communicate your wishes, no one can act on your behalf. If we look to the Commonwealth’s solution, as with the Power of Attorney, you need to be declared incapacitated and a guardian needs to be appointed, maybe it’s someone you know, maybe it’s not. Meanwhile, you are in a hospital and may not be receiving the timely care you would wish or need. Again, this is an incredibly intrusive and more expensive process than having a Health Care Proxy in place.
A Living Will/Advance Directive functions as a set of instructions for our Health Care Agents. Yes, I want to be kept alive at all costs, no I don’t. Without that in place in the above scenario, the medical staff on-site may be calling the shots on what care you do and do not receive.
A Last Will & Testament. We pretty much know what that does. If we do not have one in place, regardless of how much we have in assets, the Commonwealth will tell you what happens to your stuff and assets. For example:
If you are legally married:
All to the spouse, IF all the surviving children are the children of both spouses; this can be problematic if the spouse marries again.
If you are not married or are divorced/widowed:
(1) to your children or grandchildren per capita at each generation – no strings or conditions attached, this may not be a good thing;
(2) if there is no surviving children or grandchildren, to your parents equally if both survive, or to the surviving parent;
(3) if there is no surviving children, grandchildren, or parents, then to your siblings per capita at each generation – no strings or conditions attached, this may not be a good thing;
Additionally, someone needs to petition the Court to be appointed Personal Representative (f/k/a Executor). The Commonwealth has laws indicating who has priority for this role and that designation may or may not be someone you would have selected on your own.
Again, this process is much more expensive and time-consuming than engaging an estate planning lawyer and creating a plan that does what YOU want and names people of YOUR choosing.
Let’s get you started on YOUR plan, not the Commonwealth’s. Click here to schedule a no-fee 20-minute consultation.
1 https://www.caring.com/caregivers/estate-planning/wills-survey/
2 Id.