This is the stuff they should teach you in high school… but don’t. Once you reach 18 years of age, you need to obtain the basic legal documents. It is astonishing how many individuals and families we meet without a single legal document. Most people think of dying or preparing to die when they hear “legal documents.” And at 18 – or almost any age – most of us don’t want to think in those terms. So, we simply don’t – or assume the state will handle distributing any estate. And it certainly can (though perhaps not as you would like). What Texas does not have, however, is an efficient plan to take care of you in the event your ticker is still ticking but you are incapacitated and unable to make decisions.
So, if you are in a car accident today and die without a will, your estate will still pass to your heirs. It might be costly and inefficient, but it will pass eventually. (Though do you really want the state to determine who will care for your minor children?) But if you were to survive and end up in a coma, do you know who would be legally authorized to talk with your insurance company or take care of your financial matters? Who would decide whether or not you go into surgery or to keep you on life support? If you’re married, you’re probably thinking your spouse can legally do this, right? Wrong.
After tremendous expense and time, the state will eventually appoint someone to fill these roles, which might in fact be your spouse, though they would not have immediate legal rights to oversee matters. Worse…you’re not married and the court appoints a distant, self-interested relative to take care of these matters. Or someone completely unrelated:
One of our clients got married to a victim of this insanity. “Julia’s” aunt and uncle lived in Wisconsin. After her aunt’s passing, Julia’s uncle developed Alzheimer’s disease. Wisconsin appointed the uncle’s neighbor to act as his durable power of attorney and medical power of attorney, without notifying extended family members. After two years in this authoritative position, the neighbor had purchased a second home in North Carolina and many other luxuries, which shrunk the estate of her uncle from over $2 million to less than $500,000.
I mentioned this to a close friend recently and she said her family was very familiar with these documents because of a situation with her grandmother. After sixteen months of surviving on life support, one of her aunts decided her mother would not want to live like that and wanted the doctors to end it. The other daughter, however, wanted to keep her mother alive. The mother died of pneumonia before a court could reach a decision. It has been eight years since this event and the two sisters are still not speaking.
So, what documents do you need?
Durable Power of Attorney. The DPOA effectively delegates to a chosen representative the power to legally conduct your affairs. Without it, no one could gain access to your bank account, securities or any other property in your name without resorting to lengthy legal proceedings. Even a spouse can only make decisions about assets that you hold jointly.
(Don’t confuse a durable power of attorney with a General Power of Attorney, which has a serious flaw that prohibits it from functioning as a method of planning for incapacity: The law considers a General POA to be automatically withdrawn when you lose capacity. This means that if you have a stroke or other incapacitating event, the POA is no longer effective.)
Medical Power of Attorney. This is a document by which a person designates the person who will make medical decisions for him or her in the event of incapacity. The document has no effect as long as the principal has the physical or mental capacity to make his own decisions, but if the principal loses capacity, the agent obtains authority.
Living Will. Also known as a directive to physicians, this is designed to help an individual communicate his wishes about particular medical treatment in the future if he is unable to make his wishes known because of illness or injury. In the document one can specify whether he wishes to have life-sustaining treatment in the event 1) he is suffering from a terminal condition from which he is expected to die within six months, even with available life-sustaining treatment, or 2) he is suffering with an irreversible condition so that he cannot care for himself or make decisions for himself and is expected to die without life-sustaining treatment.
Fortunately, you can obtain these documents, plus a basic will and health-care proxy for $300 to $500 through most attorneys. You can also buy software or use an online law office if you want to do them yourself. However, we strongly recommend the use of an attorney as the boilerplate language of do-it-yourself solutions may not cover all of the situations that your document should address.
Bottom line: Everyone needs these documents, and now. Don’t wait until you’ve created your own horror story.