Estate Planning for the Chronically Ill
A recent Wall Street Journal article (4/5/2009) cited some prudent extra steps and some good ideas for individuals with chronic illness when they prepare their estates. Here is a quick summary:
1. Power of Attorney
This document allows others to act on your behalf - paying bills, filing taxes, etc. A ‘durable power of attorney’ can define the limits of authority, perhaps limiting the power to disallow selling assets over a certain value or changing beneficiaries. Some powers of attorney are ’springing’, meaning they do not go into effect until you are incapacitated, but the Journal makes the point that these are often not fast enough, that your designated individual may have to go to court and have you declared disabled before they could act on your behalf. They credit attorney Martin M. Shenkman of Paramus N.J. with the idea of two documents, one of limited power that is immediate and durable, and one with more sweeping power that is ’springing’ to handle your affairs should you be incapacitated for a long time.
2. Health Care Proxy
A normal power of attorney does not allow someone to make health care decisions for you. To do this, you need a health care proxy. Combined with a living will a health care proxy enables a trusted friend or family member to make sure your wishes are followed. In a chronic illness situation, knowing how your family and friends individually react to your illness can help in selecting the right person. The Journal quotes an individual who does not want feeding tubes to extend her life, and her brother disagreed with her decision, yet he still agreed to be her proxy, and to carry out her wishes. A health care proxy is legally bound to follow your instructions, so they should be complete and comprehensive. Depending on your ailment it might make sense for your physician to review the documents beforehand, for their knowledge of the progression of your ailment might point out some special considerations or perhaps pointing out that a hereditary disease might impact some of your family members. In cases where your illness could drag on it is important to name successive proxies, in case your first choice is no longer able to carry out the duties. One more great suggestion: carry a card in your wallet with information about your living will and health care proxy, and emergency contact names and numbers.
3. Trusts
A revocable living trust makes it much easier for someone else to manage your finances, and avoids many of the problems of probate. One option for chronically ill patients is a co-trustee, so that during occasional bouts of incapacitation your co-trustee can make decisions. These decisions can be limited by the trust, just as they can in a power of attorney.
Planning your health and end of life decisions in advance allows you to keep control, even if you can’t communicate. But you have to choose carefully - will the individual you name as proxy be able to withhold nutrition or hydration if that is your wish, or will their religious or ethical beliefs create a strong conflict? Some people name institutional trustees for their finances, since caring for a chronically ill family member is often a large burden, and having a professional handle the money matters takes off some of the burden. According to the Journal, this only makes sense if your estate is worth more than $500,000. Whatever your situation, make sure you consider your needs and the needs of your loved ones before making these critical choices, and spend the time to go over your plans in detail with your designated helpers.