When clients meet with me to talk about designing their estate plan, they
are sometimes surprised that we start with discussions about what happens
while they are still alive. Isn’t an estate plan supposed to convey
your wishes for what happens once you die? Yes, that is one goal of the
estate planning process. An equally important goal is to make sure that
what you want to happen and who you want to speak for you if you are alive,
but incapacitated and unable to speak for yourself due to an illness or
an injury, is documented.
Estate planning documents can be grouped into three broad categories. The
first category of documents speak for you while you are alive but lose
their ability to speak for you once you die. These documents are typically
a durable power of attorney, a healthcare surrogate designation and a
living will. In general, a durable power of attorney outlines who you
want to speak for you on financial and other day-to-day issues. A healthcare
surrogate outlines who you want to speak for you regarding medical issues
and a living will communicates your wishes about receiving or not receiving
life prolonging treatments when you are for example, in a persistent vegetative state.
The second category of documents speak for you once you die but have no
ability to speak for you while you are alive because until you die, you
can change your mind and change the documents. These documents are typically
a will and a payable on death designation on bank accounts or brokerage accounts.
The third category of documents combine both speaking for you while you
are alive, but incapacitated and speaking for you once you die into one
document. These documents are typically some form of a revocable living
trust. Parts of trust are effective while you are alive and parts of the
trust don’t become effective until you die.
So, learning that estate planning is really as much about protecting you
while you are living as it is about protecting your loved ones once you
die usually turns out to be a pleasant surprise.