Who is Going to Pull Your Plug?

(from Carolyn McClanahan's Forbes' column, 5/22/2012 - click here for the original post. Carolyn is a physician, financial planner, educator and storyteller.  For more on Carolyn, visit her Forbes' profile.)

We have all heard the stories – accidents, sudden illness, or slow decline taking away a person’s capacity to make their health care decisions. Unfortunately, few people have taken the time to appoint someone as health care surrogate to act on their behalf in these situations and only a handful of people have discussed their wishes with their surrogate. Today I discuss how to pick your health care surrogate – it definitely requires some thought.

What does a “health care surrogate” do? Basically, they make your health care decisions if you are incapacitated and can’t make decisions for yourself. Note – you have to be both incapacitated and unable to make decisions. For those who have a hard time making decisions, you can’t punt your healthcare decisions to someone else just because multiple choices paralyze you.

Move up http://i.forbesimg.com tMany people think a health care surrogate acts only at the end of life, but there are many situations that are not necessarily life threatening where your wishes may need to be shared by someone else. If an accident takes away your ability to communicate, your health care surrogate will need to step up to speak for you and they must be willing and able to do this at a moment’s notice.

What are the qualities of a good health care surrogate?

The health care surrogate must be a level-headed individual:

If you sustain a severe head and neck injury, and the doctor tells your spouse that despite best efforts, you will never be able to feed yourself or engage in a conversation ever again, what will your spouse do? Will he freak out and want to keep you alive forever in the hope of a miracle when you’ve explicitly stated that you do not believe in miracles? A spouse does not always make the best health care surrogate. Be certain to choose someone who can follow your wishes and make good decisions in light of heart wrenching emotions. For this reason, the role of health care surrogate may be best delegated to a health care professional within the family.

The health care surrogate cannot be shy about asking questions and must be intelligent enough to understand the implications of the answers:

To fulfill this responsibility, your surrogate must understand your goals. Every treatment the health care providers want to perform must reach the eventual outcome of the goals you’ve shared with your surrogate. For me, it is so important to always have the use of my brain and my hands. If I am in a situation where we know I have a good chance of those two functions being restored, do everything toward achieving that outcome. If it is obvious that my brain will no longer allow me to write this blog or have my fabulously self deprecating sense of humor, the only things I want done are comfort measures to let me die quickly. Your surrogate must constantly ask, “Will this help my loved one reach the goals of _________.”

The health care surrogate must be willing to stand up to the health care system:

The health care system is wired to “DO EVERYTHING!” Our malpractice and payer systems greatly affect how medicine is practiced. High pressure situations lead to high pressure heroics, especially if doctors do not have a previous relationship with you. It is in the provider’s best interest to do everything possible until your health care surrogate has screamed, “ENOUGH!” If you have been clear in your wishes to limit care in certain situations, your health care surrogate will have to be vocal and not easily intimidated by overbearing health care professionals. For example, if the doctor says you will die if they do not place a feeding tube into your abdomen, and it has already been determined that your desired ability to recognize your loved ones is not in the cards ever again, will your health care surrogate have the fortitude to say no to their request?

The health care surrogate should live in close proximity if possible and have the time to address your urgent situation:

Ideally, the likelihood of needing your health care surrogate is small. However, someone who lives across the country may not be in the position to uproot their life to address your health care needs.

Other considerations:

In addition to your primary health care surrogate, it is good to have one or two backups. Ask their permission in advance, and share a written copy of your health care goals with them. Share your decision on who is serving as surrogate with other family members, and let the entire family know you have written clear wishes that are not to be messed with. The biggest impediment to a successful outcome is to have other family members not on board with your desires. When multiple family members question decisions of your health care surrogate, angst results. Your surrogate has a difficult enough job without the added burden.

I wish us all a quick, painless, and planned for death at about age 100, but unless you plan on riding your Vespa off a cliff, planned death is unlikely. Therefore, choose your health surrogate wisely just in case you need to visit that topic sooner than you desire.

A Different Angle

My husband, Tom, and I recently updated our estate planning.  I recommend my clients review their documents at least every 5 years or as their circumstances change (marriage, divorce, inheritance, birth or adoption of a child).  This seems to be an item that can easily stay on one’s “to do” list for a year or more.  Many times estate planning is put off because of the decisions which must be made regarding the disposition of your assets after death, choosing who will be your children’s guardians’ or your power of attorney.

As Tom and I struggled with beneficiaries and contingent powers of attorney, there were two very helpful points that our attorney, Jeff, brought up which made the whole process a lot easier. 

First, it can be difficult to decide who will serve as your executor, trustee, power of attorney, etc… because we are often wondering what happens when/if that person predeceases us.  Our attorney told us not to worry about 10 or 20 years in the future, but to think about today.  If something happens to Tom and/or me now, what do we want in place?  We were able to make our choices much more quickly when we weren’t worrying about appointing a parent as a successor power of attorney because we are likely to outlive them.   As our lives change, we will update our plan, as needed.

The second advice was with regards to naming beneficiaries.  Tom and I do not have children, so our inclination was to divide our estate between our parents, my sister and niece and nephew.  Jeff asked if an inheritance would make a meaningful change to our parent’s lives, and, in most cases, the answer was no.  We were also hesitant to leave a large inheritance to our niece and nephew.  By observing the way people handle a sudden windfall, I have witnessed many instances where money causes more problems than it solves.  After further discussion, we realized our goal was to help our family members with the greatest need and also use our estate to truly make a difference in the lives of others through charitable gifts. 

By simply suggesting that we look at things differently, we were able to enjoy the process instead of looking at it as a chore.  If you are putting off your estate planning because this seems easier than the decisions that you will face, try looking at it from a different angle.  Make sure your estate documents set up so that you are comfortable with the decisions you have made if something were to happen to you tomorrow – and not just 20 years from now.

Christine Carleton, CFP®

ccarleton@taaginc.com 
www.taaginc.com  

More & More "Stuff"

The response received from our recent blog on how to handle personal property in dealing with estate planning was an eye opener.  From precious heirlooms to misperceptions about what’s trash and what isn’t, it’s clear that from aging parents to siblings to what to hand down to our own children, this issue seems to invade almost all of our lives in one form or another.   

At the risk of staying on my soapbox about our unhealthy relationship with “stuff” a bit too long, I’ve decided to continue down the road with this topic, focusing on various angles through the remainder of the year.  This week, I’d like to start by recapping some of the great tips and comments we received from clients, attorneys and other readers that I thought were well worth sharing.

-        One client shared a story of a grandmother who would promise something to offspring on various occasions, but could never remember who she’d promised what.  The result was multiple items being promised to multiple people, causing disappointment within the family.  In addition, certain items of sentimental value to some family members were sold to an antiques dealer as the grandmother simply had no idea they meant anything to anyone.  The bottom line here – the importance of communication when it comes to these sometimes difficult situations and documenting whatever is ultimately communicated.

-        A recommendation came from a local attorney specializing in helping families, especially those with family businesses, with discussions around succession, philanthropy and a wide range of strategic planning.  If the time has come to inventory and auction a family member’s assets, he recommends Everything But the House.  Located in Cincinnati, EBTH will inventory and run an online auction to liquidate.  This helps the seller retain top dollar for their items as it’s not subject to a one day only, live event.

Coincidentally, a family friend used this service when downsizing from their family home to a riverfront condominium.  They enjoyed the process and handled the emotional component by taking a digital photo of each and every item.  Now, whenever a sentimental urge strikes, they can “visit” their old possessions via a well organized catalog stored on their computers and reminisce.

-        Last but not least, a local estate planning attorney provided this straightforward tip.  He learned a while back that it’s great to ask grandma or grandpa, mom and dad or whoever in the family may need the nudge, to label items, especially artwork.  This avoids the potential debates over whether the item is truly worth good money, or was a $10 print from Home Goods.

I thank all of those who sent comments and tips on how they’ve handled their “stuff” issues and certainly felt that these were worth sharing.  Please continue to pass along your stories and observations about how you and your family have handled issues surrounding “stuff” in your lives. 

Have a great week!

Chip Workman, CFP®
E-mail Chip / TAAG Website

Estate Planning & Personal Property

My wife’s family is currently dealing with her grandfather making a permanent move to a nursing home that has highlighted an area of estate planning I believe is often overlooked.    

What do you do with all of the “stuff”?

The formal estate plan has long been in order and has been reviewed and updated on a regular basis.  We’re grateful knowing that everything will be handled to his precise wishes when the time comes.  What to do with the personal property outside larger items, however, was never really addressed.

I’ve blogged on more than one occasion about my feelings surrounding “stuff”, but in this case, believe it deserves substantial consideration.  There are items of sentimental value, items that he would like to go to specific individuals and other items that need to be donated or discarded. 

Fortunately, he is still with us and able to help sort out which items belong in what pile.  The process has been challenging, but no major blow ups or surprises have occurred.  I can easily see where this would not be the case, though, especially where the loved one is deceased.  At best, it could lead to some very uncomfortable conversations and debates amongst heirs.  At worst, it could generate costly legal battles and tear families apart.

Often times when you walk through the estate plan review process, the attorney or your financial advisor will reference a checklist about how to handle personal property.  This is often missed or forgotten about in favor of focusing on ensuring that assets get titled correctly, making sure all the I’s are dotted and T’s are crossed and that trustees, executors and beneficiaries are properly named.  It’s understandable to take a “let the kids figure it out” attitude about the rest of the stuff, but we all have different ties to different things.

The solution?  Make a video walking through your home and discuss items of significance, share stories that might be relevant to specific family members and why you’d like certain people to have certain things.  For those items you don’t believe are significant, sit down with your heirs and make a list of those things that might hold some unforeseen value to them.  As with most things, the more communication, the better. 

No one enjoys talking about a family member’s future demise, but these conversations alleviate stress both for the ill in their final days and the families after the fact.  Once these intentions are clearly thought through, sit down together as a family and make sure everyone is on the same page.  You don’t want the burden to fall to the executor as to how to interpret lists and videos that few or no one has ever seen.

If there are contested items or things you want an unbiased opinion about how to divide, consult your estate planning attorney or financial advisor.

Chip Workman, CFP®
cworkman@taaginc.com
http://www.taaginc.com/

The 25 Documents You Need Before You Die

On July 20th, The Asset Advisory Group will be hosting an Estate Planning lunch and learn session with Jeff Albrinck of Rendigs, Fry, Kiely & Dennis, LLP.  The topics will range from the basics to Jeff's take on the current state of estate tax legislation and how to plan for the future as laws continue to fluctuate with each election cycle.

In the meantime, the Wall Street Journal published an excellent article, "The 25 Documents You Need Before You Die"  which does an excellent job of prefacing Jeff's presentation by breaking down the basic documentation all of us should have on hand and easily accessible by our heirs or those that would carry out our wishes.  This often feels like an overwhelming task, but as author Saabira Chaudhuri explains, it really doesn't have to be.

You can link to the article above or by clicking here. 

Have a great week!

The Asset Advisory Group
http://taaginc.com
info@taaginc.com

How Not to Help

In a recent meeting, Jeff Albrinck, an estate planning attorney at Rendigs, Fry, Kiely & Dennis, met with clients whose 45-year old son was diagnosed with Parkinson’s. The clients were concerned about their son’s long term ability to provide for himself. They wanted to amend their estate plan to leave everything to him, leaving out their other beneficiaries. After discussing their situation with Jeff, they realized the best thing they could do for their son and his family was to leave him nothing and create a special needs trust that would be available to him if needed, but never counted against him if he applied for government-sponsored benefits.

Many times when a loved one is diagnosed with an illness, family members focus on ways to help. Often, this will include gifts of money, stock, or a future inheritance. What many people don’t realize is they are actually doing more harm than good. This may inadvertently disqualify a person with special needs from government benefits. To qualify for Supplemental Security Income (SSI) and Medicaid, disabled individuals age 18 and up cannot have more than $2,000 in assets (excluding cars and homes).

Frequently, the individual with special needs is a dependent child who has been diagnosed with a condition like Autism or Down Syndrome. Even if a parent does not think they will need SSI and Medicaid for their child, it still makes sense to qualify them for benefits. This will allow the child to participate in training programs, housing arrangements and transportation that is funded by the government. It would also be a safety net if a parent loses a job or becomes disabled and can no longer provide health insurance for their child.

So, how can you help? Encourage the parents to set up a special needs trust which will protect their child’s government benefits and pay for everything except the basics such as food and shelter, which are covered by SSI. Once a trust has been established, you can gift assets or cash to the trust or make the trust a beneficiary of an insurance policy or retirement account.

If you have a child or other relative with special needs, it is important to start planning for their financial future as early as possible. We work with several attorneys, such as Jeff, who specialize in this area. We are happy to provide you with a referral, if needed.

Christine L. Carleton, CFP®
clcarleton@taaginc.com
http://taaginc.com/

Preparing for the Unexpected

I was planning to write this week’s blog on the provisions of the most recent tax bill, but Congress isn’t cooperating. It’s interesting that a major point of contention is the estate tax. Most people were hoping to go back to the $3.5 million exemption and the 45% tax rate we had in 2009. As many of you know, when the Republicans and President Obama originally negotiated the newest tax bill, a $5 million exemption and 35% rate were included. It’s anyone’s guess when a new bill will be negotiated. We didn’t expect to get this far into 2010 without any estate tax at all. As you make your to do list for 2011, don’t let an act of Congress prevent you from preparing for the inevitable.

One aspect of estate planning covers the disposition of your property after your death but just as important is who will manage your property or oversee your healthcare if you are no longer able to during your lifetime.

The documents that should be included in your estate planning include:

Durable Power of Attorney – to give another personal person legal authority to act on your behalf to do things such as:
• use your assets to pay your everyday expenses and those of your family
• buy, sell, maintain, pay taxes on, and mortgage real estate and other property
• collect Social Security, Medicare, or other government benefits
• invest your money in stocks, bonds, and mutual funds
• handle transactions with banks and other financial institutions
• file and pay your taxes

Durable Power of Attorney for Health Care – to allow you to name someone to oversee your healthcare wishes and make any necessary medical decisions for you.
Living Will – this is your written declaration regarding life support if you are unable to speak for yourself. In most states you will specify whether or not you want to receive life-prolonging treatments at the end of life.

HIPPA Release – the Health Insurance Portability and Accountability Act of 1996 requires healthcare providers to make reasonable efforts to limit the release of protected health information. This document will allow you to name one or more persons to have access to all of your medical information. It is especially important because you want to ensure your Healthcare Power of Attorney has all of the relevant medical information if they need to make decisions on your behalf.

Once you have take the time to draw up your estate plan, it is critical to make sure it remains current. If you no longer want one of your representatives (such as your executor or healthcare proxy) to serve in this capacity, or they are no longer able to do so, make sure you update your documents. Moving to another state may also be a reason for an update. State or Federal law changes can impact your plan, so at the very least, make sure to review your documents with your estate planning attorney every five years.

Christine L. Carleton, CFP®
clcarleton@taaginc.com
http://taaginc.com/

Home for the Holidays

Many people will be traveling to spend time with their families this month. When you gather with your loved ones over the holidays, the last topic you are likely to be thinking about is legacy planning. But maybe it shouldn’t be. This is the perfect opportunity to discuss with your children the plans you have put in place in the event of your incapacity or death and the legacy you would like to leave for your family. If your parents are still living and have not offered this information to you, inquire as to the plans they have made and what is important for you to remember about their lives.

I have seen many clients hurriedly create their estate plan as they struggle to cope with an unanticipated accident or illness. It is a topic that we all would like to avoid, but dealing with it before a crisis will benefit you and your family members. To most boomers, estate planning is more than simply having the proper documents such as wills, trusts, and powers of attorney in place. As Carl Rapp, CEO of Executor’s Resource, a leader in estate management and legacy planning states, “a legacy must be viewed in its broadest context; as a combination of values and accomplishments, wishes and instructions, together with heirlooms, memorabilia and finally, financial assets.”

We now have so many ways to keep in touch with far away relatives that it is easy to communicate only with short sound bites and lose the stories that have been passed down through the generations. Some of my fondest family memories are of my grandparents talking about all that they have seen and experienced and what their dreams are for future generations of our family. We need to use the technology we have been given to record these stories – through audio or videotape or by writing letters to future generations.

Make it a point for this year’s family gathering to be different. By discussing your history and hopes for the future, your family can share one of the greatest gifts this holiday season – a family legacy.

By Chris Carleton, CFP ®
clcarleton@taaginc.com
http://www.taaginc.com/