FROM THE
NAPFA CONSUMER LIBRARY
Avoiding Family Conflict During Illness or Death
By Michael Chamberlain, CFP®
NAPFA-Registered Financial Advisor
Conflict and arguing within the family is the
last thing anyone wants to have happen.
Unfortunately, many people fail to have the
proper estate planning documents so at the
time of serious illness or death there is
uncertainty, which creates discourse and
strife from which some families never
recover.
Below is a review of the documents you may
need to be sure your desires are clear and
legal, hence minimizing conflicts and
confusion in your family.
The Advanced Health Care Directive is a
specific form that lists your healthcare
preferences to be used only at a time when
you cannot communicate your wishes. It
puts your family, doctors and hospitals on
notice as to the types of treatments/tests/
care you would or would not want. It also
lists those empowered to make health care
decisions on your behalf should you not be
able to express your desires. Everyone over
the age of 18 should have this form
completed.
The office of the Attorney General of
California has excellent information on this
topic including a sample form and may be
viewed @ www.ag.ca.gov/consumers/
general/adv_hc_dir.htm
Power of Attorney for Asset Management
appoints those that you trust to handle your
financial affairs. The form also lists those
areas in which you allow the individual to
assist you. Having completed this form can
be very important in avoiding
conservatorship should you become
incapacitated. An immediate or durable
power of attorney allows your agent to
immediately act on your behalf. A springy
power-of-attorney goes into effect only when
you are incapacitated. It would be important
to talk to your attorney and make sure you
receive the form that is most appropriate for
your situation.
HIPAA Release Form. Several years ago the
federal government passed a law to help
protect our health care information. In doing
so, it made it more difficult for our family
members or trusted individuals to deal with
health insurance matters at a time of our
incapacitation. By having this special form
completed ahead of time you allow those
individuals named in your advanced health
care directive and or power of attorney for
asset management to have access to
healthcare information to deal with insurance
matters on your behalf at a time when you
cannot do so.
A Will is the method that many people use to
transfer their assets upon their death. These
are relatively inexpensive to acquire but in
most cases will result in probate which can
be time-consuming and expensive. For many
people who own real estate or have more
than just modest assets, may be better
served by having a Living Trust. Even those
individuals having a living trust still need a
will.
A Living Trust is the preferred method of
transferring assets upon death for many
people. When assets are transferred via the
trust there is more confidentiality, less cost,
more flexibility with distribution, faster
distribution and your wishes are less likely to
be contested than with a “probated will”. For
those with a lot of wealth, the trust might
also provide some estate tax benefits. The
downside to the trust is that they are a little
bit more expensive to create and maintain.
If you have the trust, is important to make
sure that trust is properly funded. All real
estate should be transferred to the trust as
well as savings accounts, mutual funds and
other investments. Assigning your personal
property to the trust and having the proper
document allows the trustee to distribute
your personal property those that you list
thus helping to avoid conflicts within the
family when you’re gone.
You should always consult with an attorney
who specializes in estate planning to make
sure you have the correct estate planning
documents for your situation. Do not rely on
the Internet or from the sale of products such
as from Suze Orman to create your own trust
document.
Do yourself and your family a favor and make
sure you have the proper estate planning
documents now thus avoiding the family
issues that can be caused by your lack of
planning.
This article originally appeared on the NAPFA
Personal Finance Blog in conjunction with
FiGuide.com. See the original article at
http://www.figuide.com/avoiding-familyconflicts-with-your-illness-or-death.html.