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Understanding Advance Directives

Published: December 29, 2022

Advance Directives are legal documents that guide medical and health care decisions in the event that a person becomes incapacitated and is unable to make their own decisions.

Advance directives, sometimes called “living wills,” protect individuals if they are unable to make decisions regarding their health or end-of-life care.

There are many reasons why an adult may be unable to make their own medical and health care decisions. Disease processes such as Dementia or Alzheimer’s affect one’s ability to comprehend and make informed and independent decisions. Traumatic accidents or unexpected illnesses can lead to a comatose state or affect the brain’s ability to function. In both cases, you wouldn’t be able to be involved in decisions regarding your care. Even those who have lived a long and healthy life may find themselves unable to communicate effectively or comprehend during their final hours of life. In all of these instances, an advance directive is crucial to ensure that your wishes are respected and that you only receive the life-sustaining measures and the level of treatment you prefer. A life-threatening illness or accident can occur at any age, so everyone over the age of 18 should have an advance directive.

Parts of an Advance Directive

There are two main parts to an advanced directive. These either dictate specific health care instructions or appoint another individual to make the decisions on your behalf if needed. Both elements are equally important to have in place.

Living will

A living will is a legal document that states what medical care, treatments, or life-sustaining measures you would or would not want if in a vegetative state or terminal condition. A terminal condition is the advanced stage of an irreversible or incurable medical condition that will result in death despite continued medical treatment.

Resuscitation status is one of the most addressed instructions in a living will. This allows the individual to specify if they would like to be resuscitated or be a DNR (Do Not Resuscitate). They can also specify what means of resuscitation are okay. For example, someone may want CPR performed, but they do not wish to be mechanically ventilated. Other common instructions provided in a living will include measures such as blood transfusions, tube feedings, surgical interventions, and organ donation.

Health Care Power of Attorney or Health Surrogate Designation

A power of attorney, or health care proxy, is a legal document. This document allows you to designate a trusted individual, to make decisions on your behalf.

A power of attorney has more decision-making power than a living will. Typically, a living will only applies to the end of life or terminal conditions. A power of attorney can be used if an individual can no longer make informed decisions by themselves, regardless of their medical state. The individual you appoint as power of attorney can make decisions regarding medications, procedures, diagnostic exams, surgical interventions, long-term care management, end-of-life care matters, and more.

Most people appoint their spouse or child as a power of attorney. However, anyone, relative or not, can be appointed. The most important aspect of choosing this individual is trust. Choosing someone who respects your wishes and always keeps your best interest in mind when making decisions is imperative.

Creating (or updating) Advance Directives

There are many factors to consider, whether you need to create a new advanced directive or have an existing one. Something to keep in mind is that advance directives do not expire. Because of this, it is a good idea to review your advance directive every few years. This will help ensure that your wishes have not changed over time and that your health care proxy is still willing and capable of making decisions. Updates can be made to existing advance directives, or new ones can be implemented.

It’s also important to note that different legal factors can affect the validity of advance directives. For example, advance directives vary from state to state. This can be confusing because your state’s directive may not be valid in another state. When creating your advanced directive, it is extremely important to understand critical details. We highly recommend that you seek legal guidance from an estate planning or elder law attorney when doing so.

We hope you found this article helpful. If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

CLIENT Testimonial

Our family had the good fortune to find Scott Bloom.  He was invaluable helping us set up our trust. We had an unexpected health crises and realized that we had nothing in place to protect our children.  Scott explained our options and got the necessary paperwork ready for us to hand to our family, accountant and banks. Scott was absolutely the right attorney at the right time for us. We would highly recommend him and his team.
- Tricia B., Hamilton, New Jersey

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It is important to plan your estate to ensure that your assets, interests, and those you love will be protected after your death. However, without proper guidance and advice from a qualified estate planning attorney, many individuals make costly mistakes. Beyond undermining your intent and diminishing your financial legacy, poor planning can create additional stress to your heirs in their time of grief.

Six common errors frequently happen during the estate planning process. These mistakes often occur because the complete financial picture was not fully considered. It is easiest to avoid estate planning mishaps by knowing what they are before you begin or looking for these errors when reviewing and updating your plan.

Financial procrastination causes problems. While examining your mortality and making end-of-life preparations is not a particularly fun activity, try viewing it as helping and enhancing your loved ones' future lives while creating a sense of peace during your own. 

The need to protect your finances using wills, trusts, and power of attorney (POA) documents is not solely the domain of the elderly. Putting off the drafting of legal documents necessary to protect yourself and your inheritors can lead to disastrous outcomes.

By far, failing to create an estate plan is the most common mistake. Even if you do not have a lot of money, you need a will to protect any minor children you have by naming their guardians. Your will also ensures your asset distribution to heirs is carried out according to your intentions when you die and names a representative to handle debt obligations, final taxes, and other estate administrative duties. Dying without a will or "intestate" can lead to dire consequences.

Outdated wills, forms, and POAs create problems. If you made a will twenty years ago and have not reviewed and updated its contents, chances are many of the details no longer reflect current assets or beneficiaries. Estate planning is not a "set it and forget it" proposition. Reviewing estate planning documents and beneficiary forms every two years is generally adequate, barring a major life change such as divorce, birth, death, remarriage, or relocation to another state.

Beneficiaries without coordination can create expensive oversight. Beneficiary forms for retirement accounts like 401(k)s and IRAs, annuities, and life insurance policies may constitute a significant portion of your estate's assets. These beneficiary forms are legally binding and will supersede the contents of your will. Failure to update beneficiary forms can lead to an ex-spouse receiving assets that preferably would go to your heirs. Routine checks of all beneficiary designations are best practices for estate planning.

Failing to title trust assets properly can lead to probate. While not everyone requires a trust, those who do must carefully retitle their assets into the name of the trust. Forgetting to add more recently purchased property or opening a new account requires you to title them into the trust to receive trust benefits. Whether real estate, cash, mutual funds, or stocks, if you fail to move the asset into the trust, they become subject to the probate court, possible tax consequences (depending on the trust type), and a public record of these assets.

Life insurance can trigger estate tax. Life insurance can provide heirs with liquidity without the sale of assets and tax consequences when handled correctly. However, if a wealthy individual dies while maintaining ownership of their life insurance policy, they may inadvertently create a tax event for their heirs. Although life insurance death benefits are not subject to state or federal income taxes, any "incident" of ownership by the decedent can create an inheritance tax.

An estate planning attorney can help shelter life insurance proceeds from high-value estates by gifting the policy to an Irrevocable Life Insurance Trust (ILIT) or draft a new trust to purchase a new policy where the trust is the owner and beneficiary. A policy owned by the trust does not create a taxable situation to death benefits. Your attorney's careful structuring of this trust type is complex but can provide proper protection.

Joint ownership of assets with your children can lead to disastrous consequences. Naming your children as co-owners of assets, even digital, permits their creditors to access your money. The better way to address the situation is to give your adult child power of attorney and assign them as a beneficiary to a payable on death bank or brokerage account. This tactic permits them to access your funds if required during your lifetime. However, it keeps your assets from your child's estate and away from their potential creditors.

Ultimately the biggest error you can make is not finding the right estate planning attorney to guide you. This specialized attorney receives training on avoiding probate, tax implications, and asset protection if you require long-term care. Proper planning with the right guidance will help you avoid costly estate planning mistakes and protect your family's future financial well-being.

If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

- Estate Planning Mistakes to Avoid

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