About: The Basic Estate Plan – what it consists of and why you should see an attorney to execute an estate plan

A basic estate plan consists of the following three documents: a medical power of attorney, a durable power of attorney and a Will.

In Virginia, the Advance Medical Directive includes a living will and the healthcare power of attorney. This document becomes necessary when a person is no longer able to make their own medical decisions. Nevertheless, it must be executed when the person is competent to make their own decisions. Waiting to long to execute this and other legal documents can have expensive and unwanted consequences. A living will states that you do not want life prolonging procedures, for example, no feeding tube or hydration. It can state otherwise should you desire these life prolonging procedures and want to be kept alive on machines. It is your choice, but only a choice if you make it while competent. The healthcare power of attorney authorizes your named agent(s) to make medical decisions for you upon the diagnosis of a physician of incompetency. It is very important that you decide who may make theses decisions, and that you name a primary decision maker and a secondary. Once the choice is made, you should have a conversation with the chosen agent(s) to verbalize your wishes. The document authorizes a Do Not Resuscitate order as well as the right and authority to transport and hire and fire doctors and nurses. One of the most important aspects of this is the authorization for your agent(s) to speak to doctors and other medical providers. The language in the Healthcare Power of Attorney is “ I intend for my agent(s) to be treated as I would be with respect to my rights regarding the use and disclosure of my individually identifiable health information or other medical records. This release authority applies to any information governed by the Health Insurance Portability and Accountability Act of 1996 (a/k/a HIPAA), 42 USC 1320d and 45 CFR 160-164.” The HIPAA law came into effect in mid-2003, therefore, if you have a Medical Power of Attorney you want to check it for the following language authorizing your agent(s) the ability “to request, obtain, receive and review any information, verbal or written, regarding my physical or mental health, including but not limited to, medical and hospital records, and consent to the disclosure or release of this information;.”

The Durable Power of Attorney is another necessary document to have in place during your lifetime. This document is again executed prior to incompetency for use when you are no longer able to take care of your financial assets. You name a primary and secondary person (agent), whom you trust, to deal with your financial assets, such as filing taxes, dealing with bank accounts and investment accounts, speaking to social security or Medicare, dealing with insurance, selling or buying property, etc.

Should you fail to execute the above documents prior to incompetency, then the process and cost is very different. The ability of a person to take care of medical and financial decisions is then decided by the court. This process is called a guardianship and conservatorship. A petition is put to the court to name a person, who may not be the person of your choice, to act for you. A hearing before a judge is required upon the report of a guardian ad litem, an attorney who visits with you and writes up a report after talking to close relatives and your doctor. Once the Judge has decided on the conservator over your finances and the guardian over your person, then the actions of this named person is court-supervised for the rest of your life. An inventory is filed with in six months and accountings by the conservator are required yearly. This is a costly and harassing process, which can be avoided easily by seeing an attorney and choosing your own agents while competent.

A Will is the legal document used, under court supervision, to transfer your assets upon your death, according to your wishes executed prior to your death. It is also the document that names the person(s) (personal representative/executor) who will be pulling together your assets for transfer to the named beneficiaries. This process, which is supervised by the Court using an attorney called a Commissioner of Accounts, is called probate. The probate process is used to transfer all assets owned by you at the time of your death having no named beneficiary. Therefore, probate does not include life insurance or IRA’s, but does include a piece of real estate and a car owned individually. The probate process includes the filing of an inventory (those assets in your name only when you died, such as, individual bank accounts, CD’s, a home, a car, all furniture and jewelry, etc.) and accountings with the Commissioner of Accounts. The accounting is due yearly and is the means of of assuring that probate assets are being used appropriately to pay outstanding bills (funeral, medical and administrative) until the time of transfer to the beneficiaries. The estate could remain open for at least a year and maybe longer than a year before the beneficiaries actually receive their inheritance. This process is the same if you die without a will, called intestate. In the case where there is no will, the person who is in charge of the transfer of assets is called an administrator, and he or she must be credit worthy since a bond in the amount of the estate is required. If your die without a will, the transfer to beneficiaries may be different than you intended. By executing a will, you choose your beneficiaries; by not executing a will, the state law chooses your beneficiaries. For example, for all assets in your name only when you die, the Virginia law says that a spouse will receive one hundred percent if there are no children or if the children are of that marriage. If there are children of a prior marriage, then the spouse receives one third and the children divide two thirds of the assets. Therefore, it is good estate planning to execute a will when there is a second marriage with children from a prior marriage or relationship.

Therefore, your estate plan requires executing a Will, which distributes your assets after death, a durable power of attorney for financial assets and a medical power of attorney for naming those to make medical decisions when you are unable to make those decisions for yourself. You should make an with an attorney that specializes in estate planning to insure that all aspects of your estate during lifetime and after death are properly planned.