Most of us insure our cars, homes, and other valuables.
But what about your wishes?
Who would you trust to pay your bills, manage your investments, and make important health care decisions if you can’t?
Who would make sure that things get done just the way you want them done in the event of something happening to you?
It doesn’t matter if you’re young or old, healthy or frail, wealthy or not-so-wealthy.
Life-threatening accidents happen every day, and debilitating illnesses can strike with little notice.
That’s why you should consider drafting “if I get hit by a bus” documents.
Without them, you might not be happy about who takes control of your life or the decisions they make on your behalf if you can’t.
Let’s start with the difference between a power of attorney and a DURABLE power of attorney.
A power of attorney appoints someone you select to act on your behalf for legal or financial matters, such as operating a business or buying real estate.
In most states, it terminates if you become incapacitated.
A “durable power of attorney” automatically extends during the time you are incapacitated and unable to make important decisions.
The person you appoint is known as an attorney-in-fact but they do not have to be an actual lawyer.
You can also appoint a second-tier or a third-tier person in case your first choice is unable or unwilling to assume the role.
Generally speaking, your DPOA should be broken into two parts.
DPOA Part 1:
A durable power of attorney for your finances.
This document gives someone the power to manage your finances.
The amount of power you allow is up to you. But it has to be spelled out in the document.
The authority could include collecting mail, filing tax returns, making sure you’re taking RMDs from retirement accounts, and maintaining your home.
The person you pick should have discipline, patience, and a good dose of common sense.
If your finances are complex, you might allow your agent to hire professionals to assist.
DPOA Part 2:
A durable power of attorney for health care.
This document spells out your health care wishes if are unable to speak for yourself.
It takes effect if your doctor determines you lack the capacity to make your own decisions. For instance, in case you can’t understand the health care choices available or if you are unable to communicate your wishes because you’re unconscious.
In other words, when you are too ill or injured to let your wishes known, the document becomes active. If or when you recover, it no longer applies.
This person you name might be known as your attorney-in-fact, agent, health care proxy, or health care surrogate. It depends on where you live.
They will do their best to assure you receive the level of medical care you hope to receive.
What’s more, they’re required by law to follow instructions you’ve included in your document.
You might also want to include, or have as a separate document, a health care declaration or living will…
Here you state whether or not you want to be kept on life support if you become terminally ill and will die shortly without it or fall into a persistent vegetative state.
This can also address other important questions, detailing your preferences for tube feeding, artificial hydration, and pain medication in certain situations.
Hey, look, I know this isn’t stuff you really want to think about. But it’s better you tackle it now than let someone else tackle it for you!
This doesn’t have to be a complex process, either.
You can find the above documents online and complete them yourself.
However, to make sure that the documents cover your unique situation and meet your state’s requirements, your best option is to get advice from an estate planning attorney.
Also let family members know where to locate the documents and explain why you made specific choices. Hopefully, that will keep them from feuding or heading to court when you need them the most.
One more thing to keep in mind? Things change over time!
Our lives constantly change … be it health, marital status, or finances. That means your “if I get hit by a bus” documents should change, too.
For example, suppose you drafted a health care power of attorney with your spouse as your attorney-in-fact … but now you’re divorced.
I’m guessing you wouldn’t want your ex-spouse making medical decisions on your behalf!
Yet that’s what happened to Gary Coleman, the child actor who starred in the 1970s show “Diff’rent Strokes.”
In 2010, Coleman had an accident at home. While in the hospital, he fell into a coma and was placed on life support. The following day, his ex had the hospital pull the plug, even though his advanced medical directive stated that his life be prolonged as possible!
The lesson here is not to just draft your documents and forget about them.
If you get divorced or experience any other significant life change, make sure your wishes get updated, too.
To a richer life,
Editor, The Rich Life Roadmap