Gregory S. DuPont
Reduce Future Uncertainty with Advance Directives
Estate planning has traditionally focused on how to minimize estate taxes and designate “who gets what” when you die. However, managing your affairs in today’s modern world has become more complicated. Quality of life issues involving personal finances, health care, and how critical decisions are to be made are becoming increasingly more important.
Consider what might happen to your financial affairs in the event of incapacity or a catastrophic illness. How and by whom would important financial and health care decisions be made? Whether the situation involves a long, gradual decline (e.g., a deteriorating medical condition) or a precipitous event (e.g., a serious accident), there are some estate planning tools that can provide instructions for dealing with lifetime contingencies. These are called advance directives.
One mechanism that provides for financial decision-making is a durable power of attorney. This agreement grants authority to another person to make legal and financial decisions on your behalf in the event of mental incapacity. The powers granted can be broad or limited in scope and may include dealing with such personal matters as: insurance coverage; tax planning and reporting; government benefits; and savings and retirement plan decisions.
Health Care Considerations In the area of health care decision-making, a health care proxy allows you to appoint an agent to make health care decisions on your behalf in the event of incapacity. Another device, a living will, is a set of instructions for health care providers that stipulates the extent to which life-sustaining measures should be taken (consistent with state laws) to maintain your life if you are unable to express your wishes.
You may recall the 1979 Karen Ann Quinlan case in which the New Jersey Supreme Court granted the Quinlans permission to disconnect Karen’s respirator, which her doctors believed was prolonging her life in a vegetative state. This case led to the enactment by various states of Natural Death Act Declarations (i.e., living wills). In some states, the patient’s condition must be considered “terminal” before the living will becomes effective.
Advance directives by durable power of attorney, health care proxy, or living will are relatively inexpensive and easy to establish, and should be considered essential estate planning tools for all individuals, regardless of age or income level. In the absence of such documents, court intervention with the accompanying time, expense, and possible stress on your family, may be necessary to carry out your financial and health care wishes at precisely the moment when speed and timeliness are of the essence.