Estate planning involves more than just providing for the distribution of your assets at death. In addition to your Will, effective planning requires that during your lifetime you designate someone to act on your behalf if you become incapacitated. You can do this through a Power of Attorney and a Health Care Proxy. These documents allow your agent to make financial and health care decisions for you, without having to seek a guardianship or conservatorship through the probate courts. Our office can assist you in drafting and executing these essential documents. The following information is designed to add to your understanding of how these instruments will help you and your family.

I.Durable Power of Attorney

A.Introduction. A Durable Power of Attorney allows your attorney-in-fact (the individual you name as Agent) to act on your behalf in financial and relatedmatters. In most cases, having a power of attorney will avoid the need to seek the appointment of a guardian or conservator if you later lose the ability to manage your affairs.

The delegated authority under your Power of Attorney should be comprehensive; experience has taught us that one must be highly specific regarding all powers granted so that third parties (banks, insurance companies, the IRS, investment firms, etc.) do not deny your Agent the right to exercise these powers.

B.When does your Agent acquire the right to act on your behalf? Typically aDurable Power of Attorney provides your Agent the immediate right to act on your behalf since this makes it more likely that third parties will honor the instrument. Your Agent has a legal obligation to act in your best interests. If you are uncomfortable with granting immediate authority, however, you have two other options:

  • A “springing power,” which would take effect only when you become incapacitated (usually it is required that a physician certify your inability to act on your own behalf) or if you later endorse the Power.
    A copy of your power of attorney can be placed in “escrow.” Some clients prefer this because it provides the appearance of an immediate power (thus increasing the likelihood that it will be honored) without risking a premature assumption of authority.

C.Can you change or revoke your Power of Attorney? Yes, as long as you remain legally competent you may change or revoke your Power of Attorney. To do so execute a new Power of Attorney before a notary public. In addition, it is vitally important that you inform all interested parties of the change or revocation, including anyone who received a copy of your former Power of Attorney. (For this reason, we recommend that you keep a record of everyone to whom you send a copy of your Power of Attorney.)

II.Health Care Proxy

A. Introduction. A Health Care Proxy transfers authority over all decisions regarding health care from you to your designated Agent but only when you are incapable of making or communicating your wishes concerning such matters. It is a “standby” document designed to avoid conflicts regarding difficult decisions during medical crises. Persons signing such documents should be aware of the following:

  • Massachusetts does not recognize “living wills.” In some states, “living wills” try to pre-determine medical care, for example by stating one’s preferences regarding use or non-use of artificial respiration, tube feeding, invasive surgery, etc. Massachusetts does not recognize “living wills.” Proxies merely appoint someone to make difficult medical decisions when necessary.
  • Proxies do not become effective until you are deemed “incapable” by a physician. The law allows you to contest such a determination in court.
  • Proxies can be revoked.
  • Proxies are generally valid in other states.
  • HIPAA authorization grants your agent access to your medical records.

B.What you should tell your Health Care Agent. Unlike a “Living Will” you probably will not provide highly specific direction in your Health Care Proxy. You should, however, communicate your wishes to the individuals you designate as your health care agent and successor agent. We recommend that you choose individuals who understand your wishes regarding medical treatment and end-of-life decisions. These individuals should also understand that they will exercise their best judgment based on your personal values.

III.Last Will and Testament

A. Introduction. A Will leaves your estate to your named beneficiaries, typically your spouse, if your spouse survives you, and your living children (and the issue of any deceased child) if your spouse does not survive you. It also designates the Executor(s) of your estate and the Guardian(s) (in the event your spouse does not survive you) of your minor children.

B.What happens if you don’t have a will? The Commonwealth of Massachusetts has provided you with a “statutory will.” Under Massachusetts law:

1.If you are survived by a spouse, and also by children or other issue of yours:

a.½ of your estate will pass to your spouse; and

b.½ of your estate will be divided equally among your living children (and the issue of any deceased children)

2.If you are survived by a spouse, but no children or other issue:

a.The first $200,000 of your estate, plus ½ of the remainder of your estate will pass to your spouse; and

b.The balance of your estate will be divided among your next of kin (i.e., mother, father, sister, brother, etc., based on degree of relationship).

3.If you are survived by children or other issue, but your spouse does not survive you, your entire estate will pass to your living children (and the issue of any deceased children).

4.An Administrator will be appointed by the Probate Court to administer your estate.

5.The Probate Court will require your administrator to post a surety bond, an expense charged to your estate.

6.If necessary, a guardian will be appointed by the Probate Court for any minor children who benefit from your estate.

C.Tax Considerations. In 2007, the first $2,000,000 and $1,000,000 of your estate are exempt, respectively, from federal and Massachusetts estate taxes; in addition, if you are married there is an unlimited Marital Deduction applicable to all assets passing to your spouse.

You can use a combination of strategies to minimize tax consequences, including credit shelter trusts and passing assets through your will into trusts. These may be appropriate particularly when attempting to limit the taxes collected on the surviving spouse’s estate.

IV.Conclusion

These important estate planning documents protect your interests and serve as a critical part of your estate plan. The Power of Attorney and Health Care Proxy are assist you when you need help making decisions or handling your affairs and make it easier for your family to help you when you need it.

This article is offered for informational purposes only and should not be construed as legal advice.

In drafting your estate documents we will take into consideration your particular circumstances and preferences and base our analysis on your needs and the current law.

Before executing any documents, you should seek advice from our office or another qualified attorney. Changes in the law and your personal circumstances may significantly alter the strategies recommended.

ELDER LAW● ESTATE P L A N N I NG ● LITIGATION ● MEDICAID● P R O B A T E

1340 Centre Street, Suite 205, Newton Center, MA02459 ● Phone: 617.244.4373 ● Fax: 617.630.1990