SOLIDIFYING YOUR FUTURE WITH ADVANCE DIRECTIVES
June 28, 2019
Conventionally, estate planning has focused on how to minimize estate taxes and designate who gets what when you die. If you are a business owner, however, managing your affairs in the modern world has become more complicated, and quality of life issues involving health care, personal finances, and how critical business planning decisions are to be made are becoming increasingly more important.
Consider what might happen to your financial affairs in the event of catastrophic illness or incapacity. How, and by whom, would important financial decisions be made? How, and by whom, would important health care decisions be made? Such an in capacity could be either a long, gradual process (e.g., a deteriorating medical condition) or something that happens precipitously (e.g., a serious accident). Fortunately, there are some estate planning tools that can provide instructions for dealing with certain lifetime contingencies—they’re called advance directives.
One mechanism that can provide for financial decision-making is a durable power of attorney. This agreement grants authority to another person to make legal decisions on your behalf in the event of mental incapacity. The powers granted can be broad or limited in scope and can include such areas as: business transactions; insurance transactions; estate transactions; money management decisions; government benefits; and retirement plan decisions.
In the area of health care decision-making, you may recall the Karen Ann Quinlan case. In 1979, the New Jersey Supreme Court granted permission to the Quinlans to discontinue Karen’s respirator—which her doctors believed was prolonging her life in a vegetative state. The case led to the enactment by various states of Natural Death Act Declarations (i.e., living wills).
A living will is a set of instructions for a health care provider that stipulates the extent to which measures should be taken (consistent with state statutes) to maintain your (the patient) life should you be unable to express your wishes. In some states, the patient’s condition must be considered “terminal” under the state statutes before the living will becomes effective. A health care proxy appoints an agent to make those health care decisions and, unlike a living will, is not limited to decisions regarding artificial life-support. A health care proxy comes into play only when you are unable to make your own health care decisions.
Advance arrangements by living will or health care proxy are generally inexpensive, easy to implement, and should be considered essential estate planning tools for all individuals, regardless of age. In the absence of such documents, court intervention (with the accompanying time and expense and possible stress a family may endure) may be necessary to carry out your financial and health care desires at precisely the moment when facility and timeliness are paramount.