LIFE PLANNING:

THE BASICS FOR MAKING THE DIFFICULT TIMES MORE MANAGEABLE

 by  SHERYL S. HUNTER 

Hunter & Thomas, P.A.

  Attorneys and Counselors at Law

                                        (813)-835-8405                                     

INTRODUCTION

Imagine that you receive a call from the hospital.  Your mother has suffered a stroke.  Little hope of survival is given, but some options are offered.  She may remain a vegetable even if these medical technologies are utilized, or she may not live despite undergoing the advanced medical efforts.  Additionally, she will need a feeding and hydration tube if she is to be kept alive, and if her heart should stop, efforts to resuscitate her would have to be made to keep her from dying.  Would you know what your mother would choose for herself?  Have you ever discussed such issues?

         Imagine that you and your mother have discussed her desire to die more naturally under circumstances such as this, and you convey that knowledge to the doctor.  Would you be surprised if the doctor informed you that unless you can produce a living will, a health care proxy, or a durable power of attorney that includes giving you the right to make all medical decisions for your mother when she is incapacitated, the doctors most likely will feel professionally obligated to proceed with every medical treatment available to save her life, despite possible pain and needless suffering it may cause, or unwanted extension of her life? 

Imagine that your mother has been hospitalized for three weeks.  Medical bills are piling up, and you need to access money in your mother's bank account.  Is your name on her bank account?  Do you have durable power of attorney that allows you to write checks from her account?  If not, you will be denied access to her bank account, and will either have to ward off creditors, or pay out of your own pocket.  To obtain the right to access her account, you would have to go through what may be a time-consuming guardianship proceedings in which your mother's incompetence will have to be proven so that you can be named her legal guardian -- unless the court believes someone else should be named as guardian. 

Imagine that your mother does die from the stroke.  Is she an organ donor?  Did she want to be cremated, or buried? Did she have life insurance?  Did she have a will?  Do you know where her documents are stored? If she does not have a will, would you expect that you and your siblings would be able to decide how to divide her estate?  Would you be surprised to know that the estate would have to be divided according to state law, regardless of your knowledge of contrary wishes?

            What if it was you who had a stroke, or a car accident?  Would your loved ones know what to do?  Would you have made the situation easier for them by preparing the necessary documents?

ESSENTIAL LIFE-PLANNING DOCUMENTS

  There are at least five legal instruments that should be prepared and signed in advance of the events that make them necessary. They are:

1. Will
2. Durable Power of Attorney, authorized by Florida Statutes, §709.08
3. Health Care Proxy/Surrogate, authorized by Florida Statutes, §765.201-205
4. Preneed Guardian, authorized by Florida Statutes, 744.3045 (adult) 744.3046 (minor) 
5. Living Will, authorized by Florida Statutes, §765.302-310

1.  Will

            A Will is a document that instructs how assets are to pass and to whom at the time of death.  Do not think that because your assets are not that of a wealthy person, a Will is not needed.  If a person dies without a Will, then his or her estate is distributed according to state intestate laws rather than the wishes of the family, or even the known wishes of the decedent.  Unless a Will has been executed, the probate court, in accordance with state law, will dictate distribution of the assets and will assign someone to oversee administration and closing of the estate -- someone who charges a fee that may be as high as 5% of the value of the estate.  This could be detrimental to a surviving spouse, surviving children, and contrary to the intentions of the decedent.  The biggest detriment is that estate taxes will most definitely be higher if no Will exists; they can consume up to as much as 70% of the estate

            A Will need not be complex, and the most basic Will can be drafted by a lawyer for less than $300. The cost may be significantly higher, depending on the extent of the estate and the planning needed.  The main ingredients of a Will are statements regarding: (1) the assets, property and other items in the estate; (2) what property/assets will be used to pay taxes, debts and funeral expenses; (3) what property/assets will be distributed and to whom; (4) who will receive the remainder of the estate after taxes/debts/funeral expenses are paid and after designated assets are distributed; and (5) who will be the executor of the estate (i.e. the person who will administer the estate, pay taxes, and distribute property/assets according to the will; also known as a Personal Representative of an estate).

If you have a Will, be sure it is up-to-date.  Each individual, even if married, should have his or her own Will to avoid confusion.  Also check to be sure that the Will is signed, dated, and witnessed by at least two persons, who are not beneficiaries of the estate.  You should also speak with an attorney regarding the possible benefits of creating documents called living trusts, or including in the Will the establishment of a trust for a beneficiary. 

If there are changes in your life after you execute your Will, such as marriage, divorce, death of a child, etc., you may need to update your Will.   If you want to change your Will, do not make handwritten edits on the Will. All changes must be properly witnessed.  Ideally, you should create a new Will, state in it that it replaces all prior Wills, execute it property (witnesses, etc.), and destroy the prior Will.  Alternatively, prepare a codicil (an addendum) to your existing Will; follow the same formalities required when executing as Will, and be sure the codicil accompanies all copies of the Will.  

You should also consider preparing a Memorandum for Disposition of your Tangible Personal Property that is not specifically disposed of in your Will.  Examples of tangible personal property are jewelry, clothing, china, silverware, collectables, furniture and appliances, electronics, etc.   You cannot include intangible personal property such as securities, evidences of indebtedness, money, property used in trade or business, and documents of title in such a Memorandum.

As stated in Section 732.515, Florida Statutes, this Memorandum will allow for distribution of tangible personal property according to your wishes even if the Memorandum is not made until after the Will is signed, and even if it is altered over the years.  It must be in your handwriting or signed by you.  If you do alter the Memorandum after its initial creation, it would be best to make a new Memorandum altogether and destroy the previous one rather than edit with cross-outs and margin notes. 

The Memorandum cannot alter and will not affect the dispositions made by the Will.  Therefore, if a Memorandum is utilized, it must be carefully coordinated with provisions in the Will.  You should refer to the Memorandum in your Will.  Furthermore, because the testator may forget to include an item of tangible personal property in the Memorandum, or destroy or lose the Memorandum without replacement, a tangible personal property provision in the Will should direct that any tangible personal property not listed in a Memorandum for disposition of tangible personal property shall is to be distributed in a specified manner (e.g., to surviving spouse, but if not surviving, then adult child).

Finally, you may wish to write a Letter of Instruction to attach to the Will.  This is an informal document that is not legally binding but is very helpful to survivors because it provides instructions on personal matters and miscellaneous issues not included in the Will itself.  For example, instructions on: (1) who should be invited to the funeral, location of burial, etc.; (2) names and numbers of service providers (doctors, lawyers, security system, financial advisor, credit card companies, electric company...); (3) instructions and explanations of household items and equipment, and an appraisal of their value; and (4) any other imaginable issue that comes to mind which others will need to know, or which the decedent wishes for others to know.  If you think this is unnecessary because your spouse knows all of this information, keep in mind that you and your spouse could die simultaneously.

2.            DURABLE POWER OF ATTORNEY

The name of this document is a bit misleading.  It does not give anyone "power of attorney" or otherwise make a person an attorney.  Rather, it enables a person -- say a parent -- who is known as "the principal" to grant the authority to another person -- say the adult child -- who is known as "the attorney-in-fact" or "the agent" to act in a legal capacity on behalf of the principal.  For example, if I were your agent and you authorized me to handle your financial and real property affairs, I could buy or rent property in your name, and sign a check from your account to pay for that transaction.  While I would gain this authority, you do not lose yours.  Instead, I can handle some matters for you when needed, but you can still do so as well.

The durable power of attorney is exercisable as of the date of execution.  Therefore, clearly, the agent must be a very trustworthy person, as should be any substitute agent named in the event that the agent is unable to perform this service when needed.  Do not take lightly the importance of who you choose as a fiduciary.  It is unfortunately true that this power could be abused to the detriment of the principal. 

If you have no one whom you trust enough to give this power, or if you do not wish for another person to have any power until you are incapacitated, you should ask an attorney about a “revocable living trust” which allows another person to manage your financial assets only in the event that you become incapacitated.  Most banks can provide some basic information about this option.

There is an important distinction between a "power of attorney" and a "durable power of attorney."  The former, a basic "power of attorney", is intended for temporary use, and will not remain in effect when the principal becomes incapacitated or incompetent.  For example, you could grant a friend "power of attorney" during a six-week vacation you are taking to Tahiti (nice fantasy...) so that your friend can pay your bills, and enroll your children in school.  If you are in an accident and become incapacitated, that power of attorney is void -- as it will be anyway after the six-week period during which it was intended to be in force.  This is not the type of document that will help under the circumstances described in the introduction, and falls short of what you should have your elderly loved ones sign, which is a "durable power of attorney."

A "durable power of attorney" contemplates that your loved one may become physically incapacitated or mentally incompetent and will need a designated person to step in her shoes and manage her affairs.  While your loved one is still of sound mind, you should have this document executed.  Once an individual is no longer competent, he or she can no longer appoint an agent to act on his or her behalf in this easy manner.¹  Instead, a family member would have to petition the court to have the loved one declared incompetent and to be designated legal guardian.  Often family battles ensue over who should become guardian, which is another reason to execute a "durable power of attorney" selected by the principal.  Having a designated durable power of attorney is especially important for gay and lesbian couples, and unmarried heterosexual couples, because the law does not recognize priority of these relationships the way it does blood and marital bonds. The critical language to include is: “This durable power of attorney is not affected by subsequent incapacity of the principal except as provided in §709.08, Florida Statutes,” or similar words that show the principal’s intent that the authority conferred is exercisable notwithstanding the principal’s future incapacity.

Florida law requires that each power being granted be explicitly stated in the document.  The three most common categories of powers are: to make decisions and take actions regarding (1) real estate and real property, (2) use and management of finances, and (3) health care of the principal.  Some states will honor a general durable power of attorney -- "general" meaning that the agent can do just about anything in the shoes of the principal even if the document states those powers only in broad terms -- but not Florida.  Therefore, be sure that the document is all-inclusive (or is as inclusive as the principal feels comfortable) by setting forth all powers granted.  For example, to ensure that you will be permitted to buy or sell your loved ones stocks and bonds, explicitly include that power in the document.  If you are granting power to buy or sell or otherwise manage real estate property, it is best to include the legal description of the property(s) belonging to the principal.  If you wish to appoint an agent to make health care decisions on your behalf, include those powers.  Etc.

¹ The exception is that a “proxy” under Florida Statutes, §765.401, can be appointed in the absence of advance directives, for the purpose of making health care decisions only.