There are 7 estate planning documents that I think everyone needs regardless of their age or stage of life.
In my last post, I talked about the 4 estate planning documents you need in relation to your financial and personal affairs. In this post, we’ll talk about the 3 documents you need related to your health and medical affairs.
It doesn’t matter if you’re 18 or 108, you need to strongly consider having these documents as part of your overall estate plan.
If you don’t, you run the risk of someone else making decisions for you that you wish you could have made for yourself.
So, without further ado…
Estate Planning Document List (Part 2)
5. Living Will
What’s the difference between a living will and a traditional will and why do you need a living will in addition to a traditional will?
A traditional will covers your wishes, in the event of your death, regarding your financial and/or personal affairs. For example, you might use a traditional will to name the guardian of any minor children, designate who gets your Beatles album collection, and how much money you want to go to a particular charity in the event of your death.
On the other hand…
A living will communicates your wishes regarding any life-sustaining medical treatments you would like utilized in the event you become incapacitated or otherwise unable to communicate those wishes on your own.
If you’ve ever heard someone talk about “pulling the plug,” it’s very possible they were talking about life-sustaining treatment in regards to a family member or close friend who is incapacitated (i.e. in a comma, brain dead, etc.).
Don’t want someone else to decide when it’s time to pull the plug on YOU?
I didn’t think so.
Solution: get a living will while you’re still…well…living!
You can actually download examples of what a state specific living will might look by visiting the Caring Connections website (Caring Connections is a division/program of the National Hospice and Palliative Care Organization).
6. Health Care Proxy (or Medical Durable Power of Attorney)
Remember the “traditional” durable power of attorney (DPOA) I talked about in the last post about estate planning documents everyone needs? That document covers many of your personal and financial affairs, but a healthcare proxy or medical durable power of attorney (MDPOA) covers your medical affairs.
With a MDPOA, you authorize someone to make medical decisions, on your behalf, should you become incapacitated.
Ideally, this individual will carry out the wishes you have outlined in your living will, but that’s why you should probably have both documents, just in case there is any uncertainty as to what your wishes are in a particular circumstance.
Imagine taking a road trip and designating someone else as the driver. Obviously, if you tell them where to go, they’ll hopefully get to your destination. But if they have a road map, they’ll likely get there quicker and more efficiently.
A MDPOA is analogous to sticking someone in the driver’s seat and a living will is analogous to handing them a road map. It’s not a perfect analogy, but hopefully you get the idea.
Since this person might quite literally have your health (and life!) in their hands, it’s wise to think long and hard about who you might designate as your health care agent or proxy. Here’s an article with some great tips on things to consider when choosing your health care agent for your MDPOA.
7. HIPAA Release
HIPAA stands for “Health Insurance Portability and Accountability Act.” So, what does a law about health insurance have to do with estate planning?
A lot actually!
Basically, health care providers such as doctor’s offices, hospitals, and other “covered entities” as defined under HIPAA and the corresponding rules and regulations are prohibited under HIPAA from sharing your health and medical information with anyone without your approval.
Now, according to most attorneys, a well drafted MDPOA (see #6 above) should enable someone to not only make medical decisions on your behalf, but also allow health care providers to discuss your medical situation with your designated health care agent or proxy.
Seems kind of obvious doesn’t it?
If you designate someone to make medical decisions on your behalf, you would think that would allow them to have your medical history and information shared with them, right?
The problem, however, is that some of the fines and penalties for violating HIPAA are pretty steep, so some healthcare providers may take a “better safe than sorry” attitude when it comes to giving out your medical information—even to someone who possesses a MDPOA to act on your behalf!
So, to make sure this isn’t an issue, you should also take a “better safe than sorry” attitude and sign a HIPAA Release before anything happens to you where you (or a loved one) would need to use it.
There you have it—7 estate planning documents that everyone needs.
It doesn’t matter if you’re 18 or 108, the 7 estate planning documents outlined in this post and the previous post are a bare minimum list of documents needed for an effective estate plan for almost every adult in America.
Now, I know some of you might be thinking, “Do I REALLY need all of those items to be prepared from an estate planning perspective?”
Well, in a word…
In fact, there may be several more tools you need to have in place for an effective estate plan (i.e. trusts, life insurance, etc.), so what are you still doing reading this?
Go talk to a licensed, competent, and trustworthy estate planning attorney today and make sure you and your loved ones are prepared when the inevitable happens!
Disclaimer: I am NOT an estate planning attorney. The suggestions outlined above are not intended to be legal advice. If you have specific questions about your estate plan and the documents listed above, you should contact a licensed, competent estate planning attorney who will work alongside with you and your financial advisor to put together a comprehensive estate plan that helps you accomplish your personal and financial goals and objectives.