Part 1 and Part 2 of this blog topic dealt mainly with terms that deal with things once you die. What about while you’re still alive? What happens if you become disabled and/or incapacitated and not able to do things for yourself? That’s where Part 3 of this Legal Words topic comes in.
If you have a trust, the trust document will cover what the trustee can and can’t do with trust assets if you (as beneficiary) become incapacitated. If you are the trustee, it will also provide for the transition to another trustee. A trust, however, only deals with trust property. If you don’t have a trust then you need someone who can handle your finances. To have someone take care of your non-trust assets, day-to-day activities and your personal matters if you become incapacitated, you need a “Durable Power of Attorney” (DPOA). You need to execute a DPOA while you have capacity. “Durable” just means that it stays in effect even if you later become incapacitated. That’s what you want because the alternative is having someone to go to court to establish a guardianship and be the “Guardian” over you. It’s no surprise that getting a guardianship in place is much more expensive and time consuming than creating a power of attorney. In a DPOA you choose someone to be your “Agent” (also called an “Attorney-in-Fact”) to stand in your shoes and act on your behalf. You can give the Agent as much or as little authority as you want but the point of this legal document is to allow your Agent to manage matters as if you were able to do them. Having a child or another person on a bank account with you isn’t enough. What about issues with the phone company, a credit card company, your mortgage company, or brokerage company? A well written DPOA allows these matters to be handled which can save time and money in the future.
While you are able, you should also plan for health and medical issues. “Advance Healthcare Directives” are used for that purpose. These documents usually apply when you are too sick to direct your own medical care or you are facing end-of-life issues. Some states refer to these simply as an advance healthcare directive. In Florida and other states, there is the “Designation of Health Care Surrogate” (sometimes referred to as a “Durable Medical Power of Attorney”) and the “Living Will.” Some attorneys combine the two health care documents together or even within the DPOA. In a “Designation of Health Care Surrogate” you name a person who can direct your medical care if you are not able to (for example you’re unconscious or too sick to communicate to the medical personnel). While Florida calls the person you choose a “Surrogate” other states use the term “Proxy.” A “Living Will” is the document in which you state how you want to be treated at the end of your life. The name probably isn’t as clear as it should be since many non-lawyers get it confused with a regular Will that distributes assets upon your death. The “Living Will” only becomes effective under strict criteria relating to your health condition and mental capacity. The document is your chance to let everyone know whether or not you want life-prolonging procedures when you are at the end of your life. Like the Designation of Health Care Surrogate, you can choose someone to help make certain your wishes are carried out. That person again is called a “Surrogate” in Florida.
The DPOA and Advance Health Care Directives are critical legal documents to have during your lifetime. They allow others to take care of you and carry forth your wishes if you do not the ability or capacity to do so. They can save a lot of money since the alternative, when there are no legal documents in place, is to seek a guardianship which is an expensive, court intensive procedure with ongoing court oversight.
Everyone should have an up-to-date estate plan. What that plan looks and the documents involved are critical to making certain your wishes and desires are carried out. Our lawyers are here to guide you through this in an easy-to-understand way.