Illness and death liberate us from entanglement in earthly matters. But if we fail to plan for the future of our estates, those left behind face confusion, drudgery and perhaps enmity.
Experts strongly urge everyone to fill out a power of attorney, an advance health care directive and a will. Some people may want to set up trusts. Here is a look at these four tools for managing one’s healthcare and estate as death approaches.
• Powers of attorney
The most important document any senior can sign is a form designating power of attorney, says Tom Pixton of Portland-based Pixton Law Group, which handles elder law and estate planning. Power of attorney gives someone authority to manage your finances if you can no longer do it. It’s not necessarily a lawyer. Most people choose a child to take the role, which becomes vital when a senior enters long term care and big bills start arriving.
• Advance health care directives
Advance health care directives appoint a healthcare representative and set out what kind of treatment a patient wants and does not want. Tim Brophy, an elder care attorney in Medford and a member of Sacred Heart Parish, says Catholic health care directives approved by the U.S. bishops can guide seniors on matters like feeding and hydration. The directive also can alert care providers about what kind of pastoral care a patient desires.
A will is a legal document instructing what should be done with one’s money and property after one’s death. “A will is just a letter to the judge,” Pixton says. “A will is not effective until a judge in a probate court approves it.”
If there is no will, property goes to next of kin.
“That works well for some people, but for others, it is a nightmare,” Pixton says.
In Oregon, and most states, a will must have two witnesses who are not party to the will in order to be valid.
“A will can be a simple document,” says Brophy, whose late father also did legal work in Southern Oregon.
A will is not only about who gets what, but about who is in charge of carrying out what the will says. That person is called an executor, or in Oregon law, a personal representative.
Seniors often choose a child. Brophy suggests that parents select the one who is best suited, someone with a track record of good decisions and who gets along well with the family. The personal representative will need to see to it that the estate pays off debts, including taxes, and then distribute property to those named in the will. If there is a dispute, the personal representative must settle it.
If there is no will, the estate will need to pay for a bond. When there are serious questions, probate — a court process to determine validity — can take years.
The price attorneys ask for preparing a will varies. But it’s possible to think of it like buying a refrigerator: $600 or so for the basic model, with costs going up as you ask for more features.
In the legal sense, a trust is a private arrangement in which property is held or used for the benefit of one or more others.
Trusts cost more to set up than a will, but have a few advantages if needed: they avoid the public airing of the estate, which happens with wills in probate, and they are more challenge-proof than wills.
Trusts have a trustee to manage the property, often the property owner him or herself. Banks or relatives sometimes are named to serve as trustees.
Those with modest income usually are better off with a will than a trust, say Brophy and Pixton. But there are special trusts that interest some people.
Charitable trusts can be set up while you are alive to benefit your favorite causes, dioceses and churches included. You live off the interest, but the principal goes to charity when you die.
Trusts can be used to set aside money for a minor child or a disabled child who needs help managing funds, providing a firewall against creditors, including hospitals. A trust can also keep an avaricious son- or daughter-in-law from grabbing money from your married children.
Brophy says a trust should always be accompanied by what is called a “pour-over will” to capture assets that were not transferred to the trust before the death of the person who formed the will.