Estate planning clients tend to focus on the “when I die” issues when tending to their estate planning. However, if all you have done is sign a will and trust to order your affairs and distribute your property after you die, your estate plan is seriously deficient. Death is a certainty, but incapacity at some point during your lifetime is highly probable. And failing to plan to maintain continuity and management of your medical care and financial affairs during a period of incapacity can have disastrous consequences.
You must include tools in your estate plan to allow others to handle your personal and financial affairs during times when you cannot do so yourself. If you don’t, a court will be required to appoint a guardian to handle decisions concerning your person, and a conservator to manage your assets. This can be a time-consuming, expensive, and burdensome proposition.
So, what should you include in your estate plan to protect you during a period of incapacity? At a minimum, a durable power of attorney, a medical power of attorney, and a HIPAA medical authorization. Let’s look at each:
Durable power of attorney. Under a durable power of attorney, you appoint an agent to handle your financial affairs if you become incapacitated. Everything from banking and bill paying to preparing and filing tax returns on your behalf can be handled by your agent. Your agent will be able to access bank accounts, make sure your bills are paid, and keep your affairs in order until you regain the ability to do so. A durable power of attorney can be designed to take effect the moment you sign it, or at some point in the future if and when you become incapacitated.
Medical Durable Power of Attorney. Commonly referred to as a “patient advocate designation,” Michigan law allows you to appoint someone (your “patient advocate”) to make medical treatment decisions for you in the event you cannot make them for yourself. Your patient advocate can access medical records, talk to your doctors and make treatment decisions for you as long as you can’t make them for yourself. It may contain expressions of your desires concerning medical treatment at the point where your condition is such that there is no longer any prospect of a recovery, such as at the end-stage of a terminal illness. These instructions will ensure that you live your last days in dignity and peace.
HIPAA medical authorization. With a HIPAA authorization, you designate a person with whom medical providers can share your medical information and discuss your medical care. Even with a valid health care power of attorney, a medical provider may refuse to release your medical information to another person. They may refer to privacy restrictions contained in the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Doctors, hospitals, and other medical facilities fear the legal repercussions of unauthorized disclosures of one’s medical information. So without written authorization from you, they may not speak with family members, even a spouse or a child, or release medical information to them.
Don’t neglect the here and now in your estate plan. Adding a durable power of attorney, medical power of attorney, and a HIPAA authorization to your existing estate plan will give you protection during your lifetime when you are most vulnerable.