By Max Gottlieb, Content Manager for Senior Planning
It’s natural to avoid talking about or preparing for your parents’ aging, health issues and eventual end of life. Most of us avoid this conversation at all cost. GenX and Millennials have to realize their baby boomer parents make up the majority of senior citizens in the US. It’s time to have the important conversations and get some documents in place before a crisis forces spur-of-the-moment decisions. With careful planning, none of this has to be stressful.
Last Will and Testament
Everyone has heard of a last will and testament, but not everyone is familiar with the components:
- Executor: A representative that is designated to ensure the wishes and aims of the will are carried out. An executor can be an adult child, a lawyer, or even an institutional representative. It can vary by circumstance.
- Personal Property: The personal property assigned to a will is what will be divided among the beneficiaries.
- Beneficiaries: A person or multiple persons who will receive the assets defined in the will.
- Business Assets: Business assets must be mentioned separately from personal property. If a person intends to leave behind business assets, they must specifically address those assets.
- Debts, Taxes, and Other Expenses: This part of the will directs the executor when deciding how to pay for final expenses such as funeral or burial, as well how estate taxes will be paid if applicable. Also, if there are any remaining debts at the time of a person’s death, this section describes how to deal with those debts.
Without explicitly laying everything out, probate court will determine how property is divided.
Beyond naming property in a will, it is also essential to have a separate, up-to-date, and comprehensive list of all assets owned. Many people create wills years before they die and do not update them to show more recently opened accounts or assets. If your parents have multiple bank accounts, retirement accounts, stocks, CDs, bonds, or anything else, you need to make sure everything is accounted for. Without a list, there is no way to claim any of these items. It is not the responsibility of a financial institution to find you. If you do a quick Google search on unclaimed property, you will see that it is all too commonly claimed by banks or auctioned off by the state. Sometimes this is simply because no one comes forward to claim property, but all too often it is because people do not know accounts exist.
Different Types of Power of Attorney (POA)
- General POA: A general POA gives power to a person to act on someone else’s behalf. These powers include settling claims, conducting business transactions, handling financial decisions, hiring professional help, selling property, and making gifts. A general POA is extremely useful for those who are physically or mentally unable to make decisions on their own.
- Limited POA: This limits the power of the agent’s decision-making powers. A limited POA can also have a certain set of dates where the document is valid.
- Healthcare POA: A healthcare POA is a document designed to cover the possibility that a person may no longer be able to make healthcare decisions for themselves. It grants an agent power to make those decisions.
- Durable POA: A durable power of attorney is designed to keep any type of POA in effect even in the event the principal becomes mentally incompetent. Durable means that the scope of the POA continues to be effective in all situations.
Advanced Healthcare Directive/Living Will
A living will, also known as an advanced healthcare directive, describes a person’s wishes for their end-of-life care in the event they cannot communicate those wishes when needed. Different than the healthcare POA described above, which allows someone else to make those decisions, this document allows the person to make the decision themselves, in advance.
A living will can describe if you’d like to use life support, resuscitation in the event of a heart attack or stroke, or even how you’d like palliative care to be administered. This document removes the burden from loved ones when making tough end-of-life decisions. A living will is useful for an adult of any age.
The most well-known part of an advance directive is the do-not-resuscitate (DNR) order. A DNR is an advance request not to have CPR administered in the event your heart stops. You can have a DNR separate from an advance health directive or as part of the broader living will. DNRs are honored in all states.
HIPAA Authorization Form
A HIPAA authorization form is another document that can be useful for adults of any age. If you are unmarried, then it is wise to name your parents as an authorized party in case something happens to you. Essentially, it is a legal document granting access to otherwise protected health information. This means you can freely transfer medical records between doctors, caregivers, assisted living facilities and/or homes, attorneys, and other family members. It allows those that are authorized to receive information if for whatever reason a person is medically unable to give that consent.
Vital Records and Other Important Documents
Original documents should be kept in a known, safe place: birth certificates, marriage certificates, military papers for benefits later on, medical records, property deeds or titles, doctors contact information, life insurance policies, and copies of all the documents already discussed in this article.
All of these documents are meant to minimize confusion and tension around a stressful time. Think for a moment about all of the high-profile media surrounding cases where things as simple as an advanced healthcare directive were not in place. Not to mention all the complicated estate battles that are constantly being waged. These documents can be created by a lawyer or for a more cost effective solution, by a licensed document preparer.