Make health care decisions while you’re healthy – Insight on Estate Planning April/May 2012
Make health care decisions while you’re healthyEstate planning isn’t just about what happens to your assets after you die. It’s also about protecting yourself and your loved ones. This includes having a plan for making critical medical decisions in the event you’re unable to make them yourself. And, as with other aspects of your estate plan, the time to act is now, while you’re healthy. If an illness or injury renders you unconscious or otherwise incapacitated, it will be too late.
Without a plan that expresses your wishes, your family may have to make medical decisions on your behalf or petition a court for a conservatorship. Either way, there’s no guarantee that these decisions will be made the way you would want, or by the person you would choose.
2 documents, 2 purposes
To ensure that your wishes are carried out, and that your family is spared the burden of guessing — or arguing over — what you would decide, put those wishes in writing. Generally, that means executing two documents: 1) a living will and 2) a health care power of attorney (HCPA).
Unfortunately, these documents are known by many different names, which can lead to confusion. Living wills are sometimes called “advance directives,” “health care directives” or “directives to physicians.” And HCPAs may also be known as “durable medical powers of attorney,” “durable powers of attorney for health care” or “health care proxies.” In some states, “advance directive” refers to a single document that contains both a living will and an HCPA.
For the sake of convenience, we’ll use the terms “living will” and “HCPA.” Regardless of terminology, these documents serve two important purposes: 1) to guide health care providers in the event you become terminally ill or permanently unconscious, and 2) to appoint someone you trust to make medical decisions on your behalf.
A living will expresses your preferences for the use of life-sustaining medical procedures, such as artificial feeding and breathing, surgery, invasive diagnostic tests, and pain medication. It also specifies the situations in which these procedures should be used or withheld.
Living wills often contain a do not resuscitate order (DNR), which instructs medical personnel to not perform CPR in the event of cardiac arrest.
An HCPA authorizes a surrogate — your spouse, child or another trusted representative — to make medical decisions or consent to medical treatment on your behalf when you’re unable to do so. It’s broader than a living will, which generally is limited to end-of-life situations, although there may be some overlap.
An HCPA might authorize your surrogate to make medical decisions that don’t conflict with your living will, including consenting to medical treatment, placing you in a nursing home or other facility, or even implementing or discontinuing life-prolonging measures.
It’s a good idea to have both a living will and an HCPA or, if allowed by state law, a single document that combines the two. A living will typically details the procedures you want and don’t want under specified circumstances. But no matter how carefully you plan, a document you prepare now can’t account for every possible contingency down the road.
That’s where an HCPA comes in. Although an HCPA can include specific instructions, it can also be used to provide general guidelines or principles and give your representative the discretion to deal with complex medical decisions and unanticipated circumstances (such as new treatment options).
This approach offers greater flexibility, but it also makes it critically important to appoint the right representative. Choose someone whom you trust unconditionally, who is in good health, and who is both willing and able to make decisions about your health care. And be sure to name at least one backup in the event your first choice is unavailable.
Put your plan into action
No matter how carefully you plan, living wills and HCPAs are effective only if your documents are readily accessible and health care providers honor them. Store your documents in a safe place that’s always accessible and be sure your loved ones know where they are. Also, keep in mind that health care providers may be reluctant to honor documents that are several years old, so it’s a good idea to sign new ones periodically.
In this digital age, you should also have an electronic copy available. Even though some jurisdictions may be hesitant to accept anything short of an original signature, a PDF of the document may in fact be sufficient. •
Health insurance for your financesIf you’re injured or become seriously ill, your health is the top priority. But it’s also important to have a financial management plan in place in the event you become incapacitated. There are three traditional techniques for protecting your finances:
1. Joint ownership. Holding title to assets jointly with a family member or trusted friend is the simplest way to provide for their management in the event you’re incapacitated. But this strategy has negative gift and estate tax implications and gives your co-owner unfettered access to your property even while you’re in good health.
2. Durable power of attorney. This document appoints a representative to manage your investments, pay your bills, file tax returns and otherwise handle your finances under conditions you define and subject to limitations you establish. In many states, durable powers of attorney take effect immediately, but some states allow “springing” powers, authorizing your representative to act only if you are incapacitated.
3. Living trust. By placing your assets in a living trust (also referred to as a “revocable trust”) and naming yourself as trustee, you retain complete control over your finances. If you become incapacitated, your chosen successor trustee takes over.