The Four Legal Documents That Everyone Needs To Plan For Their Future

Now you can finally use the phrase, "I'll have to check with my lawyer."

The COVID-19 outbreak has all of us reprioritizing the important things in our lives, not just access to sanitary paper goods and basic human contact, but our actual lives and the lives of our loved ones. As we take things day by day, it’s more important than ever to plan for the future in the event that something out of our control does happen to us.

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What we’re talking about is estate planning, which is a fancy term for legally accounting for any uncertainties that may arise if you (or a loved one) become incapacitated or die. Think of an estate as everything you own, including your body. The planning part is what you want to happen to your estate, both when you are alive and when you’re not. That includes who makes healthcare decisions and who manages all aspects of the finances and property.

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These can be difficult decisions for anyone to make (even in the best of times) but there are four foundational legal documents (a living will, a healthcare proxy, a power of attorney, and a will and/or a trust) that are fairly simple to create and maintain that will take care of nearly all potential estate planning needs.

Now before we go any further, we need to put out some qualifiers. Every person is different. Every family is different. Every situation is different. Legally, every state is different. We are speaking in the most general terms of what estate planning one should consider. We spoke with Anthony Danna, Esq., an Estate Planning and Elder Law attorney licensed in New York, New Jersey, and Florida, to walk us through what we should consider when planning for the future.

The Hard Part: How To Start?

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“Once you have a plan to earn a living, that’s the time to develop contingencies for when that plan might get disrupted,” Danna says. COVID-19 provides a rather extreme example of the type of disruption that can upend one’s life but extended unemployment, injury, or long-term illness are all things an individual might face during their prime earning years.

However, you’re more likely to first engage in estate planning with a parent or older family member. It has to start somewhere and that place is usually what Danna refers to as “a family meeting” to discuss their own estate planning process. “This conversation goes a lot better when parents are leading it because mom and/or dad are showing a level of responsibility by planning their own lives and also exposing their children to what they need to be doing in the years going forward.

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These are truly difficult topics to speak to loved ones (or even liked ones) about. Basically, you’re asking them to open the books on their finances and talk about death. “Unfortunately, a lot of clients don't want to tell their children what their situation is,” Danna says. “You also run through a range of emotions.” Parents often feel like they’re still protecting their children by keeping them in the dark. Children don’t want to think about their parents being ill, dead, or broke.

With all of that awkwardness out of the way, it’s time to find to start working on those foundation documents:

1. A Living Will

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A living will is a fairly simple but essential written document that outlines the health care wishes of someone when they are seriously ill or in an end-of-life situation and can’t communicate. This includes the medical treatments one would wish to receive and the ones one would refuse such as being kept on a ventilator in order to breathe or receiving artificial nutrition or hydration through a tube or intravenously.

2. A Healthcare Proxy

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To facilitate the wishes requested in a living will, it is important to name a healthcare proxy. “This is where you actually name the person who will stand in your shoes and make those decisions about your expressed/unexpressed wishes,” Danna says. “Really, it's a first step in making sure that your body is treated the way you want it to be treated.” Again, that can be anything from specified organ donation at the end life, of to taking extraordinary measures to keep you alive (or not).

Often a spouse is the first person the law will allow to make these decisions. But what if you don’t have a spouse? Or what if you don’t want your parents making the call, but a sibling? That healthcare proxy has the ability the make the decisions you want to be made and they can also access medical records if necessary. It’s certainly a lot of responsibility so you need to select someone you trust to carry out your wishes.

3. A Power of Attorney

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So, a healthcare proxy puts someone in charge of making decisions about your body, but what about your financial assets and information? For that, you’re going to need a Power of Attorney (POA). A POA names someone to take care of your finances when you become ill or incapacitated. That person is called your agent. “This is much easier, quicker, and less expensive than what’s known in some states as a guardianship process,” Danna says. It is also more private.

Again, the person who is named as the agent needs to be someone you can trust. For some families, this can create conflict when one child is chosen as the agent over another. Even if mom “always liked you better” that doesn’t mean she will feel comfortable with you with handling her finances.

4. A Trust (But Not Necessarily a Will)

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At your demise, a will can convey everything of value and how you’d like it to be distributed but there’s a major downside to having one: the probate process. Probate requires going to court (which can take a long time) where the will could be challenged, paying additional and excessive legal fees, and making the will a matter of public record which opens the door to all sorts of third-party solicitors trying to make a buck.

A trust also can take care of all those things of value without the probate process. “You may need court supervision, you may need court interpretation, but you're not forced to go there in the very first step. A trust is more private and can be faster,” Danna says. “A trust also shifts the burden of cost to the person challenging the document.” With an inter vivos trust (a trust created when one is alive), you are the “grantor” and you name a “trustee” (which may be you) and successor trustees to manage the trust according to your living wishes as well of those after you’ve passed.

The Easier (But Still Hard) Part

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Look, we’re not going to even pretend that this isn’t difficult to understand and even more difficult to deal with emotionally. This stuff is technical, that’s why an estate lawyer is needed. That comes down to making some phone calls and setting up some meetings (when the time is right again). Some attorneys offer a no-cost initial consultation. It’s a conversation and a feeling-out process for someone you will be working with for a long time.

But by creating these four foundational estate planning documents sooner rather than later, you or your loved one’s wishes are clear and can be properly implemented with no confusion. The goal here is to put as little of an emotional or financial burden on the loved ones you leave behind. These initial conversations can be awkward, uncomfortable, and downright painful. But it is a truly awful experience to have to make life-or-death healthcare decisions for any individual if you’ve never discussed what they want.

And remember, these documents aren’t just for parents and grandparents, they are for all adults.