The Terri Schiavo case brought the nation's attention to a difficult but important issue: Who will make critical decisions regarding your health care if you are unable to do so "Fortunately, there is a legal means of addressing this potential future concern"
an advance directive. Generally speaking, an advance directive names someone to act on your behalf or outlines how you want medical decisions to be made if you are unable to speak for yourself. While advance directives are not financial documents, they are often part of the overall estate planning process, because they arrange for decisions to be made on your behalf that could ultimately impact your personal affairs.
A Living Will vs. Health Care Proxy
The two most common forms of advance directives are a living will and a durable power of attorney for health care (commonly referred to as a "health care proxy"
). A living will can explain "in writing"
the care you wish to receive (or avoid) if you are incapacitated by a terminal illness or serious accident. For instance, it can express your wishes for controlling pain, receiving nutrition or making life-support decisions. A health care proxy allows you to legally designate someone to make medical decisions for you. Organizations such as AARP, the American Bar Association (ABA) and the American Medical Association (AMA) have joined forces to create one document that combines both a health care proxy and a living will.
Your Role in the Process
Before you contact a lawyer about drafting an advance directive, you can save yourself time and trouble by understanding the types of issues the document should cover.
Start by talking to your family, doctor(s) and potential health care proxy about your medical wishes in as much detail as possible, outlining any information about the types of medical decisions that may come up at a later time based on your current health. Then, have your attorney draw up your advance directive. You and several witnesses will need to sign it.
Once it is written, store the directive with other important documents and make sure your family and lawyer know where to find it. Also, give copies to anyone you have named as health care proxy, your doctor and health care facility (such as a nursing home). Make sure that you and/or your lawyer review this document at least once every five years.
A Proxy for Your Finances
As you devote time to setting up a health care proxy, you can also designate a durable (or "general"
) power of attorney for your financial affairs. As with a health care proxy, a durable power of attorney can specify how you want your financial affairs dealt with in case you become disabled or suffer a serious illness and designates someone who can make any financial decisions on your behalf.
A big advantage of this "financial proxy"
is that it can help prevent your loved ones from having to go to court to request guardianship over your financial affairs if you become incapacitated. This arrangement can also give the person you designate the ability to pay your debts, manage investment transactions and even make charitable gifts that could help reduce your estate taxes.
As with an advance directive, it is important to update a financial proxy at least every five years?
otherwise, some financial institutions may not accept the directive as valid. Some financial institutions may not accept the document regardless of the date, so it is best to check with each institution you deal with regarding their policy. (In these cases, you may need to work with your attorney to draw up a more binding agreement.)
Added Peace of Mind
Though you cannot anticipate an unexpected health crisis, you can prepare ahead of time to ensure that you and your finances are cared for in a manner that coincides with your intentions, even if you cannot make this decision for yourself.