Intro: You might have resolved to exercise more, eat healthier or spend less time in front of the TV in the New Year. But there are a few Legal Resolutions that should be on everyone’s list, especially if you’ve had a life change such as marriage, children or divorce. Brian and attorney Aaron Sachs will discuss what legal documents you should resolve to update every year in this week’s Legally Speaking.
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Question 1: Aaron, this week’s topic is Legal Resolutions for the New Year. Which legal documents should people be sure to review every year?
Aaron’s answer: These documents fall under the realm of what is commonly referred to as Estate Planning. In spite of the name, you don’t have to own an estate nor do you need to be wealthy. Everyone, regardless of their income, should make sure the following documents are updated to reflect their status of life and most current inclinations — or created if they don’t have them.
1. A will
2. A medical proxy, which is document that designates a person to make healthcare decisions on your behalf in the event that you’re not able to.
3. A power of attorney, which authorizes someone to act on your behalf in legal and business matters.
Question 2: What are some things you should consider when drafting or updating your will?
Answer: There are several things you should take into consideration. Here are a few of the most important ones:
• If you’ve recently had a child and do not have a will or have not updated your will to reflect this, it’s very important that you do so. You can name a guardian in the event of your death. You can also designate a trustee to manage the money your child inherits until your child is legally an adult.
• If you’ve recently gotten married (congratulations!), you’ll want to add your spouse as a benefactor in your will.
• On the flipside, if you were divorced in 2007, depending on how acrimonious the split was or how generous you’re feeling, you might want to delete your ex-spouse from your will. Similarly, if you’ve listed her as beneficiary in insurance policies and financial accounts you should review those and make the necessary changes. You should definitely get around to updating all your legal and financial documents in the event of a divorce.
• If your assets have changed substantially, you will want to address this in your will.
• If your life has remained pretty much status quo, or you’ve moved, you should consult your lawyer about any changes in federal and state inheritance tax laws that might affect you. Based on these changes you might want to make some modifications to your existing will.
• You can name a personal representative, also called an executor, of the will to make sure the provisions in your will are carried out. If you don’t name an executor, the probate court will appoint someone to follow up on your stipulations.
• In Missouri, if you die without a will, your assets will be divided amongst your immediate family. If no relatives are found your property goes to the state.
Question 3: What about a health care proxy? What do people need to know about drafting this document?
• A health care proxy, also called a medical proxy, a health care surrogate, or a durable medical power of attorney, is a document that designates an agent to carry out your wishes, or make decisions for you, regarding future health care choices should you become unable to do so. Your agent should be over 18 and someone close to you that you trust.
• In some cases, a person will designate his or her physician. This practice has provoked some controversy because sometimes the patient’s wishes and the physician’s recommended course of treatment are in conflict. In many states, Missouri being one of them, appointing your physician, an employee of your physician or the owner/operator of a healthcare facility in which you are a resident is prohibited, unless you are related.
• Aside from designating the person, and an alternate if you choose, to make these decisions on your behalf, you should think about medical directives for this person to follow. Some things you should consider include:
a. The use and circumstances of using a feeding tube to prolong or sustain life
b. Organ or tissue donation
c. The use of certain treatments and surgeries such as blood transfusion or dialysis
• Once you put these directives in writing, and have the document notarized, your agent must carry out your wishes, even if he or she disagrees. We all remember the Terry Schiavo case that made national headlines in 2005 where her parents and husband battled in court over the decision of whether or not to remove her life support system. This case speaks to the importance of having a health care proxy.
• Missouri’s version of this document, the Durable Medical Power of Attorney, only becomes effective when you are unable to make decisions for yourself. Unless stated otherwise, two medical doctors must make the incapacity decision.
Question 4: What about a power of attorney? And how is it different than a will or a health care proxy and why is it important?
• A power of attorney (POA) is created when one person, commonly called the “principal” gives someone else, an agent or “attorney in fact”, written authority to act in the principal’s name.
• Some people use it if they have multiple transactions going and don’t want to have to be present at every one. It’s also used to help your family or relatives handle your affairs in the event of a disability, incapacity or death.
• One of the most significant ways that a power of attorney differs from the other two documents mentioned is that you can appoint a POA to act on your behalf while you’re not only alive, but perfectly able.
• Additionally, each of the documents mentioned addresses a different aspect of your life, but two or more of the documents can be combined to address the relevant issues.
• An ordinary POA is revoked when the principal becomes incapacitated. But a “durable power of attorney” is continuous and only invalid when the principal is deceased. Also, it can be created to only go into effect when the principal is incapacitated or when some other future event is stipulated.
• You can appoint one or more people to make decisions. Once this agent is appointed, his or her decisions are as legally binding as if you made them yourself. You can appoint one person to make all decisions, or one person for each specific decision. But no agent can make changes to your will. It’s recommended that you be as specific as possible in this document to avoid any confusion.
• Again, your agent needs to be over 18 and should be someone close to you, perhaps your spouse, child or a trusted business partner or attorney. The agent does not have to live in the same state but, similarly as with a health care proxy, your agent can’t be an employee of the Missouri Department of Mental Health or Missouri Department of Social Services in which the principal resides, nor can the agent be a full time judge or a clerk of the court, unless such person is closely related to the principal.
Bottom line: No matter how old you are or what health condition you are in, these documents might not be pleasant to think about, but they can really help your family and loved ones out in the event of unforeseen circumstances.