The beginning of fall has a way of returning people to their routines. Summer vacations are over, children are back in school, work schedules become more predictable, and families begin looking toward the holidays and the end of the year. It is also a good time to take care of legal and financial matters that are easy to postpone when life is busy. One of those tasks is reviewing your estate planning documents and powers of attorney to make sure they still reflect your life, your family, and your wishes.
Estate planning is sometimes treated as something people need only when they are older, seriously ill, or particularly wealthy. In reality, some of the most important estate planning documents deal with what happens while you are still alive. An unexpected accident, illness, hospitalization, or period of incapacity can leave family members trying to determine who has authority to make financial or healthcare decisions. Having appropriate documents prepared before they are needed can provide clearer instructions and help avoid unnecessary uncertainty at an already difficult time.
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Your Estate Plan Should Change When Your Life Changes
Preparing a will, power of attorney, or other estate planning document should not necessarily be a one-time event. A document that accurately reflected your circumstances several years ago may no longer make sense today. People marry and divorce. Children grow into adults. Families welcome grandchildren. People buy and sell homes, open businesses, change jobs, acquire investments, move to another state, or experience significant changes in their financial circumstances.
Relationships change as well. The person you trusted to handle your affairs ten years ago may no longer be the person you would choose today. An individual originally named as an executor, trustee, beneficiary, or agent may have died, moved away, developed health problems, or simply become less appropriate for the responsibility. Even when nothing dramatic has happened, reviewing these choices periodically can confirm that the people named in your documents remain the people you want making important decisions.
A review also provides an opportunity to consider assets that may not be controlled by a will. Retirement accounts, life insurance policies, jointly owned property, payable-on-death accounts, trusts, and other assets may have their own beneficiary or ownership arrangements. Estate planning therefore involves looking at the larger picture rather than simply confirming that an old will remains in a file somewhere.
Do You Have the Right Power of Attorney for Property?
Illinois law allows an individual to appoint an agent to make property and financial decisions on the individual’s behalf. A power of attorney for property can therefore be an important part of planning for circumstances in which illness, injury, travel, or incapacity prevents someone from handling financial matters personally.
Depending on the authority granted in the document, an agent may be able to address matters involving bank accounts, bills, real estate, investments, taxes, insurance, business interests, government benefits, and other financial affairs. The scope of that authority matters. So does the identity of the person receiving it.
Choosing an agent should involve more than selecting the closest relative. The individual may eventually be responsible for significant financial decisions and sensitive personal information. Reliability, judgment, organization, availability, and trustworthiness should all be considered. It is also worth reviewing whether a successor agent has been designated in case the first person selected cannot or will not serve.
A power of attorney should also be reviewed when someone’s financial life becomes more complicated. Buying real estate, starting or selling a business, accumulating investments, retiring, or taking responsibility for property in multiple locations may create circumstances that were never contemplated when an older document was prepared.
Healthcare Decisions Deserve Their Own Planning
Financial authority and healthcare decision-making are not the same thing. Illinois law allows an individual to designate a healthcare agent who can make healthcare decisions when the individual is unable to make those decisions personally.
This can become extraordinarily important during a medical emergency. Without advance planning, relatives may know what they think a loved one would want but still disagree about treatment or about who should be making decisions. A properly prepared healthcare power of attorney provides a way to identify the person you trust to speak for you and communicate your wishes when you cannot do so yourself.
Reviewing the document is particularly important if your relationships or health circumstances have changed. Ask yourself a simple question: If I were unexpectedly hospitalized tomorrow and unable to communicate, is the person named in my current documents still the person I would want speaking with my physicians and making decisions for me?
Illinois also recognizes other forms of advance directives, including living wills, mental health treatment preference declarations, and Practitioner Orders for Life-Sustaining Treatment, commonly known as POLST forms. Which documents are appropriate depends on an individual’s circumstances, health, and objectives. Estate and incapacity planning should therefore include a discussion not only about property but also about how important healthcare decisions would be handled.
Parents of Adult Children Have Another Reason to Think About Powers of Attorney
A child’s 18th birthday creates an important legal change that families sometimes overlook. Parents who have spent their child’s entire life scheduling appointments, speaking with healthcare providers, helping with financial matters, and making decisions no longer automatically have the same legal authority once the child becomes an adult.
This becomes especially relevant when young adults leave for college, begin working away from home, travel, or live independently for the first time. Appropriate healthcare and property powers of attorney can provide a framework for a trusted parent or another chosen person to assist if an adult child experiences a serious accident or medical emergency.
The same principle applies far beyond college. A 25-year-old starting a career, a newly married couple buying their first home, and parents raising young children all have reasons to consider who would handle important matters if something unexpected happened. Estate planning is ultimately about preparing for responsibilities and relationships, not reaching a particular age.
Aging Parents May Need a Family Conversation Before There Is a Crisis
Fall and the approaching holiday season also provide an opportunity for adult children to think about their parents’ planning. Families often wait until a hospitalization, cognitive decline, fall, or other emergency before discovering that no one knows where important documents are located or whether they were ever prepared.
These conversations can be uncomfortable, but they do not have to begin with questions about inheritance. A more practical conversation may involve asking whether parents have current powers of attorney, whom they have designated to help them, where important documents are stored, and whether their physicians or other appropriate people have the information they may need.
Planning while an individual is able to make and communicate his or her own choices is significantly different from trying to resolve these questions after capacity has become an issue. Advance planning allows the individual to choose trusted decision-makers and express personal preferences rather than leaving relatives to reconstruct those wishes during a crisis.
A Will Is Important, but It Is Only Part of the Picture
People commonly use “will” and “estate plan” as though they mean the same thing. A will can certainly be an important component of an estate plan, but comprehensive planning may involve much more.
Depending on the individual and family, a review might include a will, powers of attorney, advance healthcare directives, trusts, beneficiary designations, real estate ownership, business succession considerations, and instructions concerning personal property. Families with minor children may also have important questions about guardianship. Business owners and licensed professionals may have additional concerns involving ownership interests, professional practices, succession, insurance, and continuity if they become unable to work.
This is one reason generic documents downloaded years ago and forgotten in a drawer may not provide the reassurance people assume they do. The important question is not simply whether documents exist. The question is whether the documents currently accomplish what the individual intends them to accomplish.
Use the Change of Seasons as a Reminder to Review Your Plans
There may never be a perfect time to think about incapacity, medical emergencies, or death. That is precisely why a recurring annual reminder can be useful. The beginning of fall and the final months of the year provide a natural opportunity to review legal and financial affairs before holiday schedules and year-end obligations take over.
Pull out your existing documents and look at the names in them. Review your beneficiaries. Consider what has changed in your family, property, career, business, health, and finances. Make sure trusted family members know that important documents exist and know how they can be located if necessary. Most importantly, identify questions or changes that should be discussed with an attorney rather than waiting until an emergency forces the issue.
Michael V. Favia & Associates assists individuals, families, professionals, and business owners with legal matters involving estate planning, powers of attorney, healthcare decision-making, and related concerns. A periodic legal review can help determine whether existing documents continue to reflect your circumstances and objectives and whether changes in your life call for changes in your planning.
If it has been several years since you reviewed your estate plan, or if your family, health, property, or financial circumstances have changed, fall is a good time to put that review back on the calendar.
Contact Michael V. Favia & Associates, P.C. for more information
