A nice day today, eh?
In your estate planning, you discuss and then decide to use one of two approaches. The one chosen should make sense for you and your situation.
The documents should also deal with incapacity. So, to the trust and will we generally also add these documents:
Today we'll discuss these two additional documents. So a will or trust becomes a full estate plan.
Dealing with Incapacity
Three documents can help:
Want to improve your own estate planning for your family? Learn more at 7 Questions to Test the Strength of Your Estate Plan
Health care proxy
It's possible that before you die you become too ill to communicate your medical wishes. Or you're involved in a car accident or some other dramatic mishap. A world of possibilities.
You could benefit by now giving someone authority to speak up for you for medical reasons. MA law allows you to name up to two persons. One at a time, to make medical decisions for you. It's called the health care proxy document.
You need to sign the document before two unrelated people. They're called witnesses. Like a will, they sign too.
Some people forget that it only becomes effective when a doctor SIGNS a statement. The statement should say that you cannot communicate your health care wishes, in the doctor's opinion.
Durable Power of Attorney
How many times a week do you sign your name? I bet the number is beyond your imagination. Well, what would happen if you cannot sign it? Not good things.
That's where a durable power of attorney document would come in handy.
Like a health care proxy, there is no official government form to get. Some are short; some are long. Yet there's some similarity between forms people use. The attorney who prepares the document will determine its contents. And its length.
Like other legal documents, to create one you must be:
Unlike some other states, Massachusetts law doesn't need witnesses or a notary to sign a durable power of attorney. But if a notary does sign it, it can be more useful. For example, you can have it recorded at the registry of deeds. Yet, recording is seldom required.
The word durable means it is valid even if you become incapacitated. Hard to believe, but that was not always the case.
Here's the scoop
Before about 1980, a power of attorney became invalid if you became incompetent. Power of attorney law is very old and has been around for centuries. That area of law came about before people starting living much longer lives - no longer dying on average before 50.
Problem: Just when you needed to use a power of attorney the most - upon incapacity - the old law said it was no longer valid.
By 1980, legislatures became aware of this problem. Trying to be helpful, Massachusetts and other states passed a 'durable power of attorney' statute.
This type of statute says that a power of attorney is valid even after you become incapacitated.
But the statute requires you to include additional wording in a regular power of attorney. Words like 'this document remains in force if I become incapacitated'.
Putting these words in the document makes the document 'durable'. It's the closest estate planning comes to using magic words to achieve a goal.
How old is your durable power of attorney?
Financial institutions may believe your durable power of attorney is too old for them to accept it's use. Unexpected, but true.
They may call it 'stale.'
The problem is: Each financial company has a different time frame in mind. From our experience it's impossible to prejudge the length of time - until you want (and need) to use the document.
Living Revocable Trust
Another document that can help if you become incapacitated is a revocable living trust. This document allows another person to handle trust assets if you can't.
The trust says the person owns the assets as a trustee and may deal with them. Sell, distribute to you.
The pre-death power is an important feature of a living trust. Like a durable power of attorney, the law insists that it be only used to benefit you and your family. Can benefit the Trustee too, if the Trustee is also listed as a beneficiary. This is the living trust you will sign.
So, the living trust helps you if you become too ill or old to manage your assets.
A living trust is very flexible. If you become too old or permanently ill to manage your assets, a well-written trust allows you to resign. You resign as trustee and another person becomes the trustee. The new trustee takes over.
This 'successor trustee' then become the trustee instead of you. Your family may create some legal document showing the change.
I'm Joel Bernstein, an estate planning attorney with over 30 years of experience. I use plain English to help you understand wills, trusts, and the other documents you need to protect your loved ones and your estate.
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