Life Plan Documents Everyone Should Have

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LIFE PLAN DOCUMENTS EVERYONE SHOULD HAVE

By Catherine Blackburn, Attorney at Law

What is life planning?

Life planning is the thoughtful arrangement of assets and preparation of legal documents to organize your life and direct your affairs according to your values and choices.

It allows you and your loved ones to navigate through emergencies and predictable life changes with the least stress, expense, and difficulty possible.

Thoughtful arrangement of assets.

The first step in life planning is the thoughtful arrangement of assets.  By “thoughtful,” I mean that you consciously choose how to arrange your assets and know the consequences of how you arrange them.  If you think about this, you will quickly realize how helpful it is.

Assets

  • cash

  • bank accounts

  • stock & stock accounts

  • real estate

  • cars, boats, art, furniture, etc

  • life insurance

  • annuities

  • retirement accounts

  • businesses

Arrangement

No name
Individual name
Joint names

Business name

Trust name

With a beneficiary,
Without a beneficiary

Each of these “arrangements” of assets has consequences.  Be sure you understand those consequences before you choose that arrangement.

If you put no name on an asset (such as a Rolex), whoever has possession of it likely gets to control it.

If you put only your name on an asset (such as a bank account or car), only you get to control it.  If you are living and not able to control your own assets, you have a problem. 

If you die, assets in your individual name will be frozen until a “probate estate” is opened.

If you put assets in joint names, either owner gets to control the asset.  Either owner can use the assets or spend them.

If you are the only person who owned the asset before making it joint, you just gave away the asset.  Depending on the asset, the joint owner may be able to take it all (such as a bank account).  At a minimum, the joint owner can now claim half of the asset as their own (such as a home or car).

When one joint owner dies, most of the time the other joint owner receives the asset – all of it.  Joint assets are not controlled by a will.

The difference between tenants in common and joint tenants with the right of survivorship is beyond the scope of this article.  In almost all circumstances, tenants in common applies only to real estate.  Do not rely on old notions of “owner 1 or owner 2” versus “owner 1 and owner 2.”

Once you make an asset joint, the joint owner’s creditors can come after the asset. If you put your child or children as a joint owner of your assets, their creditors can come after it.  Their spouses can come after it.

I advise people to think before making assets joint.  In general, there is no such thing as a joint asset “for convenience.”  Making assets joint comes with consequences.

If you are reading this article and now concerned about your joint assets, don’t panic.  So long as the joint owner will cooperate, the joint ownership can be changed.  If the joint owner will not cooperate, you can take legal action to recover your property but you must consult an attorney.

Assets in the name of a business are controlled by the business.  So, you need to think about who controls the business?

Many of my clients are like me – they are the only owner and operator of their business.  In this case, you need to think about and plan who will control your business if you cannot do it.

A business continues after you die.  You need to think about who will control and own the business after you die.

Putting assets in the name of a business does not solve the problem of who controls the business if you cannot and who inherits the business when you die.

Assets in the name of a trust are controlled by the trustee or trustees.  Although a trust can exist without a written trust agreement, most trusts have a written agreement.  The written agreement defines who will be the trustee or trustees (i.e., who will control the assets owned by the trust) and who will be the beneficiaries (i.e., who will receive the assets under specific circumstances). 

The specific uses and operation of a trust are beyond the scope of this article.  However, the brief explanation above helps you understand why trusts are used so often.

Assets with a beneficiary are controlled by the owner until they die.  When the owner dies, the asset transfers to the beneficiary.

You can name a beneficiary on almost any asset.  Banks will put beneficiaries on your accounts (called “Pay On Death” or “POD”).  Most financial institutions will put beneficiaries on your investment accounts (usually called “Transfer on Death” or “TOD”).  Retirement accounts absolutely should have beneficiaries who will receive the account when the owner dies.  Insurance and annuity contracts should have beneficiaries who will receive the proceeds when you die.

Naming beneficiaries solves the problem of who receives the asset upon your death.  It does not solve the problem of who controls the asset if you cannot control it yourself.

Legal documents to organize your life and direct your affairs – According to your values and choices.

This is where Life Plan Documents Everyone Should Have comes in.  Preparing legal documents is how you organize your life, direct your affairs, and make sure your values and choices are honored.

So, what documents should everyone have?  At a minimum, everyone should have:

A power of attorney,

A Health Care Surrogate Designation,

A Living Will – if you want to decline heroic measures at end of life, and

A Will.

How do these documents organize your life, direct your affairs, and honor your values and choices?

A Power of Attorney appoints at least one person who has authority to control your assets,

Including your share of joint assets and your business,

So long as you are alive.  A POA expires when you do.  Once the principal (the person who created the POA) dies, it is no longer valid.

A power of attorney also allows the agent (the person appointed by you) to enter into contracts, manage legal proceedings (like lawsuits or bankruptcy), file your taxes, and do many other things. 

A POA is very powerful. That is its purpose.  Creating one should be done carefully and thoughtfully.  Choose your agent(s) because they are effective, responsible, and trustworthy.  The purpose of a POA is to manage your assets and affairs; it is not to make the agent feel important.

A POA in Florida is effective when it is signed!  It does not wait for you to be incapacitated.  If you do not want your agent to have access to your assets and affairs immediately, do not give them a copy of the document.  There is no need for an agent to have the POA document unless they need to use it.  Hopefully, you will manage your own affairs for your entire life.

I have a story I tell most clients about the power of attorney.  It goes like this –

Years ago, I was buying life jackets for my sailboat.  (I no longer have a sailboat).  A friend went with me to the marine store and asked why I was buying $35 life jackets when there were $5 life jackets available.  I said,

“You want to waste your money on this.”

If you need to put on a life jacket on a boat, it is a bad day.  And, on that day you want a life jacket that will save your life.  I hope you never have a day like that.

A power of attorney is like a life jacket.  I hope you never have to use one.  But if you do need a power of attorney, you really need it and you need it to be comprehensive and powerful.  I still hope you waste your money on a power of attorney.

A Florida power of attorney has “super-powers.”  These are special powers that are activated only if the principal initials next to them.

I generally have clients initial and activate all of the super-powers.  Some lawyers agree with me about this, and others disagree. 

Because I also practice elder law, I assist people to qualify for Medicaid benefits when they need nursing home care.  It is often necessary to restructure assets and create special trusts in order to qualify.  If the individual cannot manage his or her assets at that time, we need a power of attorney to make sure they qualify, and we may need any one of those super-powers to get the job done.

I have a philosophy that it is better to choose the agent carefully (or appoint joint agents who must act together) than it is to restrict the agent’s authority. 

A Health Care Surrogate Designation appoints someone to interact with your health care providers and give consent for care if you are not able to give consent yourself.

Florida law lists the people who have authority to do this in the absence of a written surrogate form.  Your spouse, children, parents, and siblings have authority to act for you – in that order.

Most people want their spouse to act as their surrogate.  However, what happens if you and your spouse are in the same car accident?  And are in the same emergency room?  I strongly recommend that you name at least one “back-up”/alternate surrogate to manage health care for you if your spouse is not able to do it.

If you do not want anyone in the list of “automatic” surrogates to control your health care, then you need to complete a written health care surrogate designation.

In 2015, the Florida health care surrogate statute was amended.  It now allows you to initial a box allowing your surrogate to speak with your health care providers and access your medical information immediately.  If you do not initial that box, the surrogate’s authority takes effect only if you are unable to make your own medical decisions.

Many people want their surrogate to be able to talk with their doctors and nurses.  Now, you can give them authority to do it.

The same 2015 amendment allows you to initial a box allowing your surrogate to give consent and sign for you immediately.  This does not give the surrogate authority to override your choices.  Under Florida law, and the health care surrogate designation document, you always have the right to make your own health decisions so long as you have mental capacity to do so.

Allowing your surrogate to give consent immediately avoids a formal capacity examination.  In emergency circumstances, it is often quicker to proceed immediately to surgery or diagnostic procedures than to initiate a formal capacity examination. 

A Living Will expresses your wishes for end of life care.

If you do not want heroic measures at end of life, you should complete a living will.

If you do not complete a living will, then health care providers may not know what you want.  Often, your health care surrogate will know what you wanted.  However, if someone disagrees with them, there is a problem.  When disagreements arise, you will likely receive all heroic measures.  It is best to prepare a written living will.

A Will appoints someone (the “personal representative”) to manage and distribute your assets after your death.

Some people think that a Will “avoids probate.”  That is incorrect.  A Will is your ticket to probate.  (The probate process is beyond the scope of this article.  Suffice it to say that some kind of court proceeding is required.)
The Will does not control –

Joint assets (those almost always go to the joint owner)

Assets with a beneficiary (those go to the beneficiary)

Assets in a trust (this is why a trust is the most common method of “avoiding probate”)

Assets owned by a business may or may not be controlled by the Will. 

A corporation (Inc., or PA) can state in its Bylaws how control of the business and distribution of the business assets will proceed if an owner dies.

A limited liability company (LLC) can state in its Operating Agreement how control of the business and distribution of the business assets will proceed if an owner dies.

If the business has no Bylaws or Operating Agreement, or the Bylaws or Operating Agreement do not state what happens if the owner dies, the Will controls what happens to the business and its assets.

If you do not have a Will, Florida statutes will say who gets to be personal representative of your estate and who receives your assets.  This is called an “intestate” estate.

Your spouse will have first right to be personal representative.  If you do not have a spouse, that right falls to children (all of them equally), parents (both equally), siblings (all of them equally), or more remote blood relatives. 

If your spouse is not able to manage an estate, you have multiple children, your parents are not able to manage an estate, and/or you have multiple or no siblings, it can be lengthy and expensive to get a personal representative appointed.  I strongly recommend that everyone prepare a Will – if for no other reason than to solve the problem of who gets to be the personal representative.

In an intestate estate, assets pass according to Florida statutes.  The statutes generally provide that a spouse and children inherit assets (100% to the spouse if the children are your children and your spouse’s children; 50% to the spouse and 50% to the children if the children are not your spouse’s children). 

If you do not have a spouse or children, or one or more children have died, or one or more siblings have died, figuring out who inherits what can become very complicated very fast.  I strongly recommend that everyone prepare a Will so that these complicated issues do not arise now or in the future.

Not everyone needs complicated life planning documents.  If you know who you want to appoint as your power of attorney, health care surrogate, and personal representative; your assets are reasonably straight-forward; and you know who you want to receive your assets upon your death, Blackburn Law Firm, PLLC – LifePlanLaw.com offers the “Simple Life Plan” at a reduced cost.

If you are willing to go online to MySimpleLifePlan.com,

answer six qualifying questions,
complete a questionnaire,
pay,
request a telephone consultation with me, and
schedule a date to sign your documents

all online,

you can receive a Health Care Surrogate Designation, Living Will, Power of Attorney, and Will for $375.00.  This is half the regular price of meeting with me and coming back later to sign your documents.

The Simple Life Plan is drafted by an attorney.  If you have questions later, you have an attorney who can answer them.

Your documents are still explained to you by the attorney.

You do not have to print your own documents.

You do not have to find your own witnesses or Notary.

Your signing appointment can be in an evening or on a Saturday.

You will receive your original, signed documents and a copy.

If you think the Simple Life Plan is right for you, go to MySimpleLifePlan.com now and check it out.

If you would like to schedule a complimentary consultation to discuss your specific circumstances, Call 727-826-0923 now.

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