By Jon Carroll
Life is full of surprises. Some of these are the types of surprises we want; others are not. Two years ago this month, I experienced one of the not-so-pleasant ones. After an epic pickleball match, I passed out due to a massive heart attack. I was relatively young and in decent shape, so this event was very much a surprise.
We can never be fully prepared for a major medical or other life-changing event, but estate planning tools can help us to prepare for potential unexpected situations of incapacity or the inability to manage our own affairs.
One of these tools is the Durable General Power of Attorney. This is a document whereby an individual appoints someone else to manage all their stuff on their behalf. It is considered “durable” because the document can still be used if an individual becomes incapacitated. It is “general” because it contemplates the person you have appointed as being able to manage almost all of your stuff. Because this document gives so much authority to another individual, you want to think carefully about who is appointed as your power of attorney. Typically, spouses appoint each other, but you should also appoint a trusted alternative in the event your spouse is unable to take on this role.
Because a Durable General Power of Attorney grants such broad authority to someone else to act on your behalf, some financial institutions are hesitant to accept such a document. Your bank may have their own specific form they want used. It is a good idea to reach out to your financial institution and find out if they will accept a Durable General Power of Attorney and what specific requirements they may have.
Another estate planning tool that can help one prepare for life’s unpleasant surprises is a Trust. Since it is October, you can think of a trust as one of those orange plastic jack-o-lanterns a child takes trick or treating. Once you have created that jack-o-lantern, you need to fill it up with candy. This is called funding the trust – where you transfer your assets to the trust such that the trust becomes the owner of the assets. With a Revocable Living Trust, the jack-o-lantern holds candy for your benefit. You can eat the candy (beneficiary) and decide (trustee) who else gets some candy. You can even dump the whole thing out and get rid of the pumpkin (revoke the trust) if you wish.
You can also appoint another trustee to manage the candy in the jack-o-lantern in the event you are unable to do so. This is how a trust allows you to plan for potential incapacity. If you are unable to manage the stuff in your trust, the successor trustee will take over and manage it. Ownership of the assets in the trust doesn’t change, and you are still the one who gets to eat the candy in the trust.
While we can hope that life only throws us pleasant surprises, we know that is not always the reality. The tools of estate planning can help you be prepared for those times.
Finally, I would be remiss if I didn’t thank my colleagues who sprang into action and the talented medical staff who made sure I still have some trick or treating in me.
Jon Carroll is a licensed attorney. The information in this column is provided for educational and informational purposes only, and does not constitute legal advice, nor establish an attorney client relationship. Consult a qualified attorney in your jurisdiction for legal advice specific to your situation.
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