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Client Alert - Documents You Need in Addition to Your Will


Once you have signed your will you may think that your personal and family affairs are all in order, and to a certain extent you are correct. A will expresses how you intend your assets to be distributed upon your death. The fiduciary named in your will has the responsibility of carrying out those intentions.

However, a will takes effect only after your death and after it is “probated” in the appropriate court. A will does not address situations that may arise during your lifetime if you are unable to or incapable of attending to your affairs, whether temporarily or permanently. What should you do to insure that decisions concerning your medical care or your financial and personal affairs are handled in accordance with your wishes if you cannot make them yourself?

You should sign three additional documents: a durable power of attorney, an advanced health care directive (commonly referred to as a living will or health care proxy) and a HIPAA statement.

Power of Attorney. By signing a power of attorney you designate another person (referred to as the “attorney-in-fact”) to act on your behalf with respect to a wide range of financial matters, such as banking, investments, buying and selling of assets, gift making, etc. The powers of the attorney-in-fact can be limited to a specific activity or purpose, or, as is more commonly found, the powers can be broadly described in order to anticipate the various situations that may arise.

The most common type of power of attorney is a “durable power of attorney,” which permits the attorney-in-fact to act for you even if you become incapacitated or incompetent after execution of the power of attorney.

A second form of power of attorney is a “springing power of attorney,” in which the power of the attorney-in-fact does not become effective until the occurrence of a specific event, such as your incapacity or incompetence. A springing power of attorney is less common because of issues that may arise in demonstrating a person’s incapacity or incompetence.

Several states, including New York, have adopted a standard statutory power of attorney form. This enables an attorney-in-fact to act promptly, if necessary, in attending to the individual’s affairs. Nonetheless, you may find that some financial institutions prefer to use their own internally prepared power of attorney form.  If you have the opportunity, you should contact your financial institution to obtain its power of attorney form and have it signed along with the statutory power of attorney form. This will avoid delays if your attorney-in-fact needs to act quickly with respect to the account held at that financial institution.

Health Care Directive. A Health Care Directive is a document which (a) expresses your wishes concerning your health care and the use of extraordinary life sustaining means (such as artificial hydration and feeding, mechanical respiration and cardiac resuscitation) if you are unable to make those decisions, and (b) designates a person to carry out those wishes.

In its earliest form, a Health Care Directive was commonly known as a living will, which was evidence of an individual’s wishes, but was not in and of itself legally binding on a doctor or hospital. In order to comply with an individual’s wishes set forth in a living will, family members often had to resort to court intervention.

After some highly publicized “right to die” cases (such as the Karen Ann Quinlan matter), many states adopted laws authorizing individuals to designate a person to carry out the individual’s wishes regarding the use of extraordinary means to be kept alive. In New York, this document is called a “Health Care Proxy.” The “proxy” is a health care designee who has the authority to make health care decisions on your behalf, including the withholding of life sustaining measures.

HIPAA authorization. As part of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the privacy of patient medical records and other health related information has been protected under federal regulations since April 2003. Only individuals authorized by you have the right to discuss your medical condition with a health care provider, gain access to medical records or communicate with a health care provider or insurance company concerning billing or health care coverage.

While these regulations provided much needed privacy protection of sensitive and personal information, especially with the free flow of information available on the Internet and the proliferation of identity theft, situations arise in which these regulations hinder, rather than protect, a patient’s care. Very often, these situations arise when the patient is physically and mentally unable to discuss his or her medical situation or treatment with a health care provider or grant authority to an individual to participate in such discussions. Other times, questions involving insurance coverage or reimbursements must be resolved while the patient is not capable of handling these issues.

It was commonly thought that an individual acting under a power of attorney had the authority to access this information. However, many health care providers refuse to acknowledge an attorney-in-fact. Therefore, it is prudent to execute a separate HIPAA authorization which specifically authorizes an individual to communicate with a health care provider and insurance company on issues relating to your health care.

Conclusion. Estate planning is more than just the preparation of a will. It involves an evaluation of your financial and personal affairs, your family relationships and needs, and how these factors interact with each other. Estate planning does not end upon the execution of a will or the ancillary documents discussed above. You should periodically review these documents to insure that the estate plan reflects changes that occur from time to time in your financial or medical situation, the tax laws or family relationships.

In a subsequent Client Alert we will discuss the issues involving the establishment of a “living trust.” In the right situation, a living trust can be an effective means for managing your assets during your lifetime in the event you are unable to do so. There are a number of factors to consider in evaluating whether a living trust is right for you.

Our Trusts & Estates attorneys are experienced in evaluating and structuring effective estate plans that address your needs. Whether it is assessing a current estate plan, or implementing a new estate plan, or advising on other personal or business affairs, we are available to provide you with counsel and assistance to help achieve your goals and objectives.

For further information, please contact Robert Giordanella, Simon Gerson, Robert Halper, Peter Porcino or Morton Price.


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