CRISIS? WHAT CRISIS?
In California, we are encouraged to plan ahead for emergencies such as earthquakes – we should nominate someone out of state for all our family members to pass telephone messages through, our children should take an emergency survival kit to school including a first aid kit, blanket and comforting photos of the family pets.
In reality, far more Californians are affected everyday by road traffic accidents, untimely heart attacks or other tragedies than by earthquakes. What crisis plans do you have for your loved ones in the event of your untimely death or incapacity? What plan will maximize your chance of being well cared for after a serious injury?
ESTATE PLANS AS EMERGENCY SURVIVAL KITS
An estate plan is your emergency survival kit. It contains documents which work together, easing you and your loved ones into a better future.
None of us can know the nature of future crises, but the legal documents in an estate plan are the best tools the law has devised for covering many of the unexpectedly grim situations faced by families every day. The trick is – these documents must be in place before the emergency arises – when you still have time to think through the best options available and you have the legal capacity to ensure the documents take effect. Tackling emergencies proactively and in advance maximizes the chances of a good outcome. Waiting for emergencies to arise and having to react, unprepared, in unnerving circumstances invites largely avoidable heartache. Once you no longer have legal capacity, for example because of a serious blow to the head, it is too late to create these documents.
One of the most common emergencies in California is the road traffic accident. How might an estate plan help your family?
ADVANCE HEALTHCARE DIRECTIVE
Many road traffic accidents are not fatal, but result in serious injuries. A “living will” or advance healthcare directive directs doctors to cooperate with a person of your choosing (your “healthcare agent”) in deciding what care you should receive in the event you are unable to decide yourself. You need to choose this healthcare agent wisely – it should probably be someone who lives near you or a close family member, someone who will be assertive but calm and polite under stress, someone who will listen carefully and intelligently to emergency room doctors and be able to process information quickly and cooperate with them.
Your advance healthcare directive also determines whether you will be kept alive on a ventilator even if there is little or no chance of recovery. It is very important to make this decision in advance to avoid placing a traumatic burden on family members in an already stressful situation. Without an advance healthcare directive, your family members, who may know your intentions, will have little input with regards to your care. You will have no-one to advocate for you in, potentially, an extremely busy hospital waiting room.
NOMINATION OF CONSERVATOR
Many people do survive traumatic injury, but are unable to look after themselves in the medium or long term. If you are unable to make decisions for yourself, the court will appoint a conservator to make those decisions for you.
There are conservators of the estate who make decisions relating to your assets and conservators of the body who make decisions relating to your way of life. The same person can fulfill both functions. If you sign a nomination of conservator while you are still able to make decisions for yourself, then you can save yourself and your family a lot of heartache. In the absence of a signed nomination of conservator, a judge will decide who should be your conservator.
There are many professional conservators. They charge substantial fees. If a professional conservator is appointed by the court and your family challenges that decision, the professional conservator is entitled to use your assets to pay for an attorney to defend the appointment. This can be very expensive.
Over one hundred people a day die in road traffic accidents in the United States. How does your estate plan prepare for this emergency? A will provides for the disposition of assets after your death. Nowadays, many wills are “pour-over” wills, which means they leave assets primarily to a trust and the assets are then divided up according to the trust provisions. Your will is also the document in which you nominate guardians to care for your minor children in the event of your death.
Without a will, your children and your assets will be subject to the provisions of the California Probate Code, which may not provide the best possible outcome in your individual circumstances.
Courts supervise the passing of assets through wills – this is called probate. Many assets also pass through probate when the deceased has no estate plan. Probate can be a lengthy, cumbersome and expensive process. Your absence, as the breadwinner, may require that the family downsizes or refinances the mortgage on the family home. Probate increases the complexity of dealings relating to the family home. That’s one of the reasons people create living trusts.
Assets such as the family home can be placed into a living trust during your life. The trust terms set out what will happen to those assets in the event of your death or incapacity. Typically, the surviving spouse will continue to serve as trustee in the event of your death and he or she can continue to manage the assets as necessary. This empowers the family by providing continuity during a time of grief. Sign up for Busy Wills, Inc.’s free mini-course in estate planning to find out more about how living trusts can help you and your loved ones.
POWER OF ATTORNEY
Your estate plan includes another document essential for any emergency survival kit – a power of attorney. There are many way in which a power of attorney can help you and your family survive perilous times. The different types of powers of attorney require their own article for a full explanation. That’s why powers of attorney are the subject of our next blog entry – so please follow the Busy WIlls, Inc. blog for more information.
Emergency plans help families survive misfortune. An estate plan provides the legally recognized documents to empower your family in the event of your death or incapacity. It is not luck which enables some families to thrive in the aftermath of tragedy – it is a well-designed estate plan.
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