What if one document could prevent your assets from freezing, provide another person the power to manage your financial affairs, or negate the need for a court-initiated guardianship in the event of incapacity? Brace yourselves as we dissect the fundamental aspects of estate planning, focusing on the General Durable Power of Attorney, a crucial document that holds the power to do just that! We'll also guide you through the importance of including a HIPAA authorization in a Healthcare Power of Attorney, and the necessity of appointing an agent for mental health care. With these in place, you can be assured that not only your wishes will be carried out, but your rights will also be protected.
Did you know that a will doesn't automatically avoid the probate process? Join us as we debunk this common myth, and delve into the differences between a living will and a last will. Learn how including religious concerns in a living will can substantiate your testament. As we traverse through the realm of estate planning, we'll discuss the potential burden of long-term care in old age and how it can affect your estate. We cannot stress enough the seriousness of the probate process and the repercussions mistakes made by the executor can have. So, buckle up and let's gear up for a proactive estate planning journey!
What if one document could prevent your assets from freezing, provide another person the power to manage your financial affairs, or negate the need for a court-initiated guardianship in the event of incapacity? Brace yourselves as we dissect the fundamental aspects of estate planning, focusing on the General Durable Power of Attorney, a crucial document that holds the power to do just that! We'll also guide you through the importance of including a HIPAA authorization in a Healthcare Power of Attorney, and the necessity of appointing an agent for mental health care. With these in place, you can be assured that not only your wishes will be carried out, but your rights will also be protected.
Did you know that a will doesn't automatically avoid the probate process? Join us as we debunk this common myth, and delve into the differences between a living will and a last will. Learn how including religious concerns in a living will can substantiate your testament. As we traverse through the realm of estate planning, we'll discuss the potential burden of long-term care in old age and how it can affect your estate. We cannot stress enough the seriousness of the probate process and the repercussions mistakes made by the executor can have. So, buckle up and let's gear up for a proactive estate planning journey!
Foundations are General Durable Power of Attorney Healthcare Power of Attorney Living Will and Will.
Speaker 2:That's right.
Speaker 1:What is a General, durable Power of Attorney?
Speaker 2:So a General, Durable Power of Attorney is a document that allows you to name somebody to act on your behalf as if they were you for legal and financial purposes. So imagine, greg, if something were to happen God forbid you were to become incompetent and capacitated, unable to act on your own behalf. The question is what happens next? Right, that's where you're the most vulnerable. If you think about protection, what we try to do as a state planning elder law attorney, we want to protect you when you're your most vulnerable. You're most vulnerable if you have no ability to act on your own behalf because of incompetency or incapacity. So you need somebody appointed legally to be able to act on your behalf, as if they were you, to make these very important legal and financial decisions like qualifying for benefits to pay for long-term care, setting up protection for assets and ensuring that your wishes are carried out.
Speaker 1:Would my assets be frozen if I became incompetent or incapacitated because of accident, illness or injury, if I hadn't, say, given my wife or my child an agency under a General, durable Power of Attorney to be able to act for me for financial and legal purposes?
Speaker 2:Certainly it can be. You know it can result in freezing of assets and it's important to talk about what assets can be just locked up, because a lot of people think, hey, I'm married, I don't need a power of attorney. I have a spouse, they can act on my behalf. But if you have an individual retirement account keyword being individual no one else can access that account on your behalf. They can't, you know, get money out of that account to pay for care. They can't utilize that account and protect it. You know real property is the same thing. If you're married in North Carolina, even if the property isn't just one spouse's name, the other one has marital interest in that property, cannot transfer or otherwise protect that property without that person's signature. If they're incompetent and capacitated, they can't sign. You've got to have a power of attorney.
Speaker 1:So what if I become incompetent or incapacitated? I haven't done a General, durable Power of Attorney, the first foundational document. What is the option that my wife, my children, what can they do to access my assets and to pay for my care?
Speaker 2:Yeah, it's a good question. Unfortunately, they would have to resort to some type of guardianship. So that's a court-initiated proceeding where they, you know, have to tell the court we think this person is incompetent and capacitated, they cannot act on their own behalf. Therefore, we're asking the court to take the rights away and appoint somebody on their behalf to make decisions for them. And you know that's one of those extreme situations that you don't want to be in because you know, as an attorney, I want to make sure that people retain their rights, even if they have diminished capacity, and prevent from, you know, having those rights taken away where they can choose for themselves. And you know the danger in that is that a family member might not be appointed as guardian. You could have a third party, maybe an attorney you don't know, maybe the Department of Health and Human Services. You know, and there's a lot of, you know, risk and unknown there. So you want to avoid that if at all possible.
Speaker 1:Sure, so I can be proactive and do a general durable power of attorney and avoid a guardianship where a court would appoint a power of attorney and I can choose who I want to be my agent and act for me with a general durable power of attorney, but I don't have a choice in the court proceeding. Is that right?
Speaker 2:That's right, but unfortunately, you know, if it does happen, if you do have to resort to a guardianship for whatever reason, there is a power of attorney in place. Thankfully, the person named as power of attorney has priority over any other third party to be your guardian and act on your behalf.
Speaker 1:So it's a safeguard, even if someone brought a guardianship proceeding for me, that's right. Okay, that the person I want to act for me is going to act, that's correct. That is phenomenal. The second foundational document is a healthcare power of attorney. Deceptively named, it actually appoints an agent to handle your healthcare issues. All right, only, when I can't act for myself, it's my choice. What happens with my healthcare until I'm not able to make that choice because of incompetency or incapacity, right? And then who do I want to step in as me and make the right healthcare decisions in an emergency situation, in a long-term care placement situation, whether I need surgery, medication, any decisions.
Speaker 1:I'm a huge proponent of and fan of putting a HIPAA authorization built in within the health care power of attorney. Okay, that way they can also pull my medical records to see you know what's going on in the medical records, to get a second opinion, to find out why an aspirin costs $500. You know, there could be many reasons why you would want them to do that, but that's also an important component, I think. And then in North Carolina, a health care power of attorney. The agent can also be designated to handle burial, right, and you can designate. That's where you really designate. We see attorneys put that in wills traditionally, but the will really isn't probated for, say, 30 days after someone's passed away. I don't think I'd be in good shape for 30 days unless I was on ice. So you really want to contemplate that.
Speaker 1:In the health care power of attorney, right, mental health care. We want to make sure we decide whether we want our health care agent to handle mental health care, because that's a separate statute in the state, right, and if you don't include the mental health care portion and reference that statute, then you're left with not being able to really manage the whole person and especially as we age you know Alzheimer's, dementia it really blurs the line between physical and mental health care. So we want to include all those elements. These things are complex documents but they allow you to appoint an individual that you want to handle your care. Now, in a general, durable power of attorney for for financial and legal matters or a health care power of attorney for health care and you know, any kind of health care issue, would it be smart for me to have a successor, somebody waiting in the wings, in case the primary agent I appointed could not perform that duty?
Speaker 2:Yeah, absolutely. Just like any sports team needs to have a deep bench, you need to have backups. Thing is, though, it's not a popularity contest. You want to pick somebody especially if you're naming them to control finances, legal rights. That's sophisticated enough to make those decisions on your behalf. If they can't balance their own checkbook, they shouldn't be making your decisions. They should also be sophisticated enough and know your wishes right and have the wherewithal to ask, maybe a professional, even if you're not able to communicate, to ascertain what the decision that would be in your best interest is.
Speaker 2:Now, one thing that I see a lot questions that I see a lot from clients asking about healthcare power of attorney is day to day. I can see a need for that. Day to day taking my loved one to the doctor, maybe picking up prescriptions, but what's the big picture reason for a healthcare power of attorney? Can it help someone obtain benefits to pay for long-term care? Is it necessary to have a healthcare power of attorney if a loved one's trying to get someone something like Medicaid, va to pay for long-term care?
Speaker 1:Yeah, so you will get stopped really at the gate at the beginning if you do not have in place a general durable power of attorney and healthcare power of attorney when you're going to apply for benefits. And then we have to shift the guardianship and which is much more costly, it's a lengthier process, it's a court process. If family members don't agree. Many times the default is again, like you said, to appoint a third party. So you might end up with a guardian that you don't want and court oversight over every dollar that's spent. So should we really trust the person that we're appointing as the agent under a general durable power of attorney or healthcare power of attorney?
Speaker 2:Certainly, one of the things that we do as state planning elder law attorneys is, whenever we're setting up an estate plan, we're ensuring that there are fail safes in place, meaning that if you put someone in a trusted position what we call a fiduciary position that's a legal term for it you want to make sure that that, if they were to violate their duty under the power of attorney, that they could be hell liable for that. There's some recourse there. But that doesn't mean that you shouldn't pick somebody that you trust unequivocally, someone that you know can do the job, someone that you know has your best interest at heart.
Speaker 1:That's very important, absolutely. So what about a living will? Now I get confused, because there's the last will in Testament and there's the living will. What is a living will?
Speaker 2:Sure. So living will is your declaration for your desire to die on natural death. So you're saying, look, if I'm terminal, I'm, you know, incurable, I'm past the point of no return, it's okay to go ahead and let me go, because I don't want to live in some type of, you know, persistive vegetative state, and this is an important note. A lot of people get this mixed up with a DNR. A DNR is very different.
Speaker 2:An attorney doesn't draft a do not resuscitate. That's a legal, a medical classification that you request, you know, from a medical facility, saying don't take any type of extraordinary means to bring me back to life, to resuscitate me, whereas a living will is saying look, do your best, try to bring me back, but if it's confirmed that I'm just, you know, brain dead lights are on but nobody's home you can go ahead and let me go. Now, why would someone want a living will? Why is this something that someone would request? Personal reasons number one. Maybe you don't want to imagine yourself languishing in that position. Another thing is, though, that it's important to understand that North Carolina spouses inherit medical debt, right.
Speaker 1:So personally and that's right.
Speaker 2:They personally inherit medical debt under the doctrine of necessaries, unlike other debt. So if I rack up a bunch of credit card debt in just my name, my spouse is not going to inherit that. But if I, you know, develop some type of debilitating illness and I have to go to the hospital, have to, you know, rack up a bunch of bills, medical bills, she will inherit that. So it's important to understand that if you don't have a living will, you could be in a position where you know you're not able to express your own wishes and you could be racking up medical bills because someone has to make the decision. A loved one would have to make that decision.
Speaker 2:It's a hard decision to make. It takes time to make the decision as to whether or not to take somebody off life support. The longer it takes, the longer you know you're racking up that medical debt. So not only do you get to express your wishes so you absolve somebody else of having to make that really hard decision you also get to practically avoid unnecessary debt being inherited by your loved ones. Now, with respect to a living will, another important part is and I'll ask you this have you ever seen any type of issue with a family where a loved one has had to make that very hard decision, maybe as healthcare power of attorney, and it's caused an issue in the family.
Speaker 1:It causes controversy sometimes. I had an aunt who languished for probably 11 years because her siblings couldn't agree and my father was really left to care for my aunt and be the primary decision maker. But everybody couldn't agree and in that situation it puts the person that needs either care or might want to be let go in a really tough situation. It puts my dad, put the whole family, you know, and they just could not reach a decision right. So you can clarify that and avoid controversy. I can't think of anything that is a document of greater responsibility, personal responsibility, than deciding if I'm in a terminal, persistent vegetative state, if the only medical procedures that can be done are going to prolong my suffering, me saying it's okay to let me go in that situation, right, and it can save, you know, my daughters, for example. I think that is a decision that would stick with them to have to unplug that right. Yeah, I can help them with that decision if I'm ever in that situation.
Speaker 2:Yeah, and a lot of folks think they can make that decision and they probably can, but you really don't want. You would love that guidance Sure.
Speaker 1:Let me ask you this Sure If I have specific religious concerns, that I want certain rituals or religious ceremonies performed prior to being let go, is that something that I would put in a living will?
Speaker 2:Absolutely. You know that's something we routinely do. For people with those convictions, we put whatever language is necessary in the living will to make sure those things are performed prior to, you know, the actual, you know, removing the person from life support. Sure, yeah, absolutely.
Speaker 1:Phenomenal, phenomenal. Thank you, brent, appreciate that. So now you've clarified for me the difference between the living will and now we can go into the last will in Testament. Right? Your living will does not pass property or title to assets. Your last will in Testament does so. The last will in Testament appoints an executor, which is the person that is responsible for overseeing the transfer of assets through the probate estate. I've heard people many times say hey, I have a will so therefore I don't have to go through probate. That is exactly the opposite. Okay, so people have that misconception sometimes.
Speaker 1:Probate is the process by which a last will in Testament passes your assets. It is a court process and I would say minimum six months, yeah, okay, or longer, right. You know we have some probate estates that run much longer. It just depends on the complexity of the estate. So the last will in Testament also direct how the money or real estate or vehicles or any asset that has to change title other than a beneficiary asset through probate. It says who's going to get what and what percentages or dollar amounts. Right, so it really allows you to control your assets as they flow through the will.
Speaker 1:But then when we're looking at an estate plan or when you're considering an estate plan, ask yourself this question is a last will in Testament the right place to pass my assets? Is it the best place? Because in North Carolina the only place that a claim from a creditor can attach is during the probate process, when the last will in Testament is passing your assets. So if there is a danger of a long-term care event which right now averages, you know, the numbers are all over the place the highest I've seen recently is 17,000 a month Okay, yeah.
Speaker 1:I mean, you know you think about multiple years of that and it could spin down even a largest state. So if you're in that situation a spouse is in that situation, or that might be something that would happen in the near future and I would ask you what percentage of people over 65, according to a US Department of Health and Human Services study done in 2005, are going to need some type of long-term care in home, assisted living or nursing home care?
Speaker 2:Yeah. So the answer is 70% of individuals who make it past the age of 65.
Speaker 1:70%. That's why this is so important. Yep, right, 70%, that's a great. You know, a large chance, right? A more chance than not that someone over 65 right now will need long-term care and the cost can be exorbitant. Therefore, we want to avoid some, in certain situations, using the will as a primary place to pass assets. We might want to look at the last will in testament like an insurance policy right that if something failed, then we have it there to kick that asset over to a trust or make sure it gets to the right person.
Speaker 2:Right, the will should be thought of as a last line of defense. You know the thing that you rely on.
Speaker 1:you know that's like a safety net that ensures Last line of defense.
Speaker 2:Yeah, and you know a lot of people think about the will, just like you said, as something that helps you avoid probate. A will is just a guide through the probate process. That's really what a will is. Sure, and you know you do name an executor. It's important to know that if you name an executor, that person is not the executor until they're nominated by the court.
Speaker 1:They have to qualify as the executor.
Speaker 2:That's right, and they have to take an oath and everything would be appointed by the court to be the executor. So, if you think about a will, think about probate, think about the probate court, think about the probate court taking jurisdiction over all of the assets and requiring your executor to go through an extensive accounting process to, you know, navigate a complicated legal system and giving the chance of any creditor who wants to make a claim against your assets to be able to do so within, you know, a 90 day period.
Speaker 1:And here's your claims. Or long term care Medicaid, sure claims If they've had to come in and pay for nursing home care.
Speaker 2:Oh, trust me, I hear a lot of folks saying I don't have any creditors, I pay my bills. Why should I worry about creditors? Most people incur debt that, could you know, saddle their estate right before they pass away. So we're talking about the medical debt that you incur right before you pass away with us. Hospital debt, likely long term care debt, though, whether it's in home, assisted living or skilled nursing care, and what about being under the contempt power of the court?
Speaker 1:Yeah, if you're an executor, you have a if you're late moving an asset around, or you're dealing with a stock company, or you know some. You know some entity that's not responding, right yeah.
Speaker 2:Yeah, let's say I'm an executor. I'm, you know, probating an estate. Someone named me the executor. I was appointed by the court and I'm trying to do my best. It's complicated. The will is a legal document. Maybe I have trouble interpreting it, Maybe I'm having trouble understanding the. You know just navigating the process. If I mess up, I can be held in contempt by the court. They could put me in jail for messing up.
Speaker 1:That's right. That's the seriousness of the probate process.
Speaker 2:Right, even if I'm the only heir too, by the way.
Speaker 1:Yeah, yeah, yeah, that's tough, that's tough. That's a great summary of foundational work General durable power of attorney, healthcare power of attorney, living wills and wills. I would like to offer a free consult to sit down with an attorney and review your estate plan and talk about what tools and estate planning would be right for you. You can take advantage of that free consult by going to mcelderlawcom that's msm Mike CSN, charlie Elderlawcom, or calling 1-888-999-6600. And thank you so much for joining us today.