Do you know the differences between a Living Will and a Last Will and Testament? A Living Will is effective before a person dies and the Last Will and Testament becomes effective after death. Estate planning assures that your wants and desires at the time of grave sickness or death are known and followed. Rose Mock, a Toledo area estate planning attorney with a background in social work, explains the five standard documents used in estate planning to guarantee your wishes are known and followed.
Mock explains that end of life or estate planning is a topic many people don’t know very much about. She requests that clients bring their Advance Directives to their first consultation, but most are unsure of what these are. Mock explains it: “Advance Directives are your end-of-life forms. There are five documents that everyone needs in their basic estate plan.” These include a Durable Power of Attorney for Healthcare, Durable Power of Attorney for Finances, a Living Will, the HIPPA Release, and a Last Will and Testament.
Durable Powers of Attorney, for Healthcare and Finances
“If someone becomes incompetent or incoherent, it is important to have a Power of Attorney for Healthcare in place.” instructs Mock. She explains that the healthcare power of attorney directs the type and extent of medical care a person will receive in the event that they are unable to make their own decisions. A separate Power of Attorney for financial matters works similarly in the sense that it appoints an individual to control a person’s bills and financial responsibilities while they are still living.
“A companion document to the Healthcare Power of Attorney is a Living Will,” said Mock. This is part of the “end of life” paperwork that will indicate to the care provider the signor’s wishes regarding “artificial nutrition or hydration” in the event that an individual is placed on life support. This means that you have a say if you want to be given fluids intravenously and it also covers the subject of resuscitation in the event of losing your heartbeat. Mock reminds us that, “This must be put in writing, otherwise it’s pretty difficult to convince medical professionals (who are sworn to abide by the Hippocratic oath, to treat the sick to the best of their ability) to discontinue life support if that has not been memorialized in writing as the patient’s wishes.”
Working alongside the Living Will and Power of Attorney is a HIPAA Release. “The Health Insurance Portability and Accountability Act (HIPAA) is a federal law which protects people’s healthcare records,” said Mock. The person designated as the power of attorney in charge of medical needs will need to be able to communicate effectively with the doctors and this is accomplished by the patient executing a HIPPA Release. The Power of Attorney for Finances may need access to medical information as well to better understand their client and to make responsible monetary choices on their behalf.
“A will does not avoid probate. It does the exact opposite. It’s a treasure map for the probate court naming someone to be an executor or executrix and allowing them to serve without bond,” says Mock. The term “probate” in the sense of a will means to prove it is genuine in court. If the Last Will doesn’t explicitly state that the executor/executrix is directed to “serve without bond,” then, in most instances, the designated estate representative will have to go to court and post a surety bond for two and a half times the value of the estate assets. The bond ensures that the executor/executrix will take proper care of the decedent’s assets, or face the reparations owed to the beneficiaries. “The biggest most important reason anyone would want a will is if they have specific bequests to make sure someone receives a certain asset, or a written will can also nominate a person to administer their estate without being bonded,” explained Mock. If there is not a beneficiary designation in the will, a person’s assets will be distributed according to the laws of the state, which provides a listing of who will receive the estate assets including a spouse, children, parents, siblings etc. According to Mock, a Last Will and Testament, once deposited in Probate Court, is required by the law in Ohio, to have six months elapse before an estate can be closed, to make sure creditors can assert their claims.
Do Young People Really Need Advance Directives Right Now?
“Any person over the age of 18 should have all of those documents. Young people may be involved in an accident” warns Mock. She explains that doctors and medical professionals, based on HIPAA even tell the parents of a child who may even pay for their medical care that the young person has been hospitalized. This is why a HIPAA Release is so crucial, accompanied by Durable Powers of Attorney for Healthcare and Finances.
Creating a trust is another alternative
Creating a trust, and transferring an individual’s assets into the trust during their lifetime, can avoid the need for filing an estate in Probate Court. In that situation, and when done correctly by an experienced estate planning attorney, an individual’s assets are transferred out of an individual’s name and into the trust before death, and the trust document directs how those assets are to be distributed or maintained. While the cost to create a trust can be several thousand dollars or more depending on the complexity of the plan, a trust obviates the need for Probate Court involvement which could cost more if there are significant assets and/or disagreement among the survivors.