Many, many years ago, I was a Boy Scout. Over the years, the Scout’s motto “Be Prepared” has always stuck with me.
When I’m working on a client’s estate plan, the motto “Be Prepared” invariably pops into my head. You see, an estate plan is all about being prepared. As I explain what an estate plan is below, you’ll see the connection.
At its essence, an estate plan directs what will happen if you become incapacitated or when you pass away. Let’s break this down.
On Incapacity
When someone becomes incapacitated – whether by mental illness or deficiency, physical illness or disability, or chronic substance abuse – the incapacitated person quite often needs medical attention and assistance with finances. Medical attention involves talking to doctors and making treatment decisions, while assistance with finances means someone is paying the bills for you. If you can’t communicate or understand the situation, how are you going to talk to your doctors? How are you going to pay the bills?
That’s where a Health Care Power of Attorney and Durable Power of Attorney become essential. With a Health Care Power of Attorney, you can appoint someone called a Patient Advocate to make medical decisions on your behalf. Using a Durable Power of Attorney, you can appoint an Agent to access your bank account and pay those never-ending bills while incapacitated.
The key is to have the Health Care Power of Attorney and Durable Power of Attorney in place before incapacity hits. That way your Patient Advocate and Agent are legally empowered and ready to go. In other words, “Be Prepared”.
On Death
Death brings about very raw emotions as we all know. But there is also a practical side to death. It involves very mechanical things like paying bills and taxes, finding assets, notifying heirs, accounting for income and expenses, and distributing inheritances.
With a Will, you can pick the right just the right person to handle these responsibilities. You can also select the beneficiaries of your choice to receive your assets. If you don’t make out a Will, the State of Michigan has a default plan in place. That default plan, however, might not be the plan you want. You can make your own choices by making out a Will. Just remember that to avoid Michigan’s default plan, you’ve got to make out your Will before you pass away. In other words, “Be Prepared”.
You can take even more control using a Trust. Unlike a Will, you can keep your family and assets out of the probate court with a Trust. Using a Trust, you can appoint a Trustee who’s ready to start handling your finances at your incapacity or death. And you can hand-pick your trust beneficiaries, while establishing the best way for them to receive their inheritances. All these benefits can be realized by proactively creating a trust before incapacity or death. Or as the Boy Scouts say, “Be Prepared”.
The key tools of an estate plan include the Health Care Power of Attorney, Durable Power of Attorney, Will and Trust. By creating an estate plan with these documents, you and your family will take charge of your affairs and “Be Prepared” for incapacity or death.