Estate Planning Basics

In very general terms, the core of an estate plan will consist of either (i) a Will or (ii) a Living Trust with Pour-Over Will. An estate plan should also include a Durable Financial Power of Attorney and an Advance Health-Care Directive (also called a “Living Will”). It also includes a cremation authorization for people that desire to be cremated.

We recommend that you have your estate plan reviewed every three to five years, partly to insure that the wording keeps up with recent legislation and tax laws. Marriage, divorce, births and deaths in your family should be considered when determining if your estate plan accurately reflects your current personal situation.  It’s very important that your documents meet the requirements of the HIPAA legislation (Health Insurance Portability and Accountability Act), or they may not work properly when needed.

A Will is a legal document that contains your instructions for what you want to happen to your assets when you die.  A will must be validated by the probate court before it can be enforced.  Accordingly, if you use a Will as the core of your estate plan (and many of our clients do), you are anticipating a future probate.
What happens if I die without a Will?
You actually already have a “Will”, but you didn’t design it.  Anyone who dies without an estate plan that they created is given the default plan created by the New Mexico Law of Intestacy.  If you die without a Will, a judge will appoint someone to be personal representative of your estate.  This may not be the person you would choose if you had planned ahead.  The Laws of Intestacy will determine where your property will go and when they get it.  And if you have minor children, a judge will decide who will take care of them.
The bottom line is that if you care about who handles and gets your property or how they get it, then you probably want a Will or Trust.
Should everyone have an Advance Health Care Directive (Living Will)?
Everyone who is eighteen years or older should have an Advanced Health Care Directive. 
You may recall the national attention surrounding Terri Schiavo, a young woman who spent seven years in a persistent vegetative state.  During these years, her husband and parents fought in the courts about whether to remove her feeding tube.  At one point, the feeding tube was removed, only to be reinserted several days later after legal decisions were made.  The feeding tube was finally permanently removed, and Ms. Schiavo died almost two weeks later.
Nobody wants to have a situation like this happen to them.  If you are unable to make health care decisions due to mental or physical incapacity (Alzheimer's, stroke, heart attack, etc.), a properly drafted Advance Health Care Directive will not only designate a person of your choosing to make health care decisions for you, but it will also contain clear instructions on what you want.  You can make your own decisions about whether or not you want pain medication, hydration, artificial nourishment and other life support if you are in a persistent vegetative state or dying.
What happens if I don’t have an Advanced Health Care Directive?
It can be a nightmare for your family and friends if you haven’t designated someone to make health care decisions for you.  Usually the Court will designate a guardian to make your health care decisions.  There are often legal battles between family members over who would be the best guardian.  One example of this is when the incapacitated person is married but has adult children from a prior marriage.  In a situation like this, it is not uncommon for the adult children to petition the Court for guardianship, especially if the incapacitated person hasn’t been married to the new spouse for very long.  In situations like this, family members often stop speaking to each other.
Once the Court gets involved, it usually stays involved until you recover or die and the Court, not your family, will control how your assets are used to care for you and also how and where you receive your care.  This process can be expensive, and the end result will most likely not be what you would have chosen for yourself if you were not incapacitated.
Should I use the Living Will document from my doctor’s office?
We don’t recommend it.  Most of these that we’ve seen don’t contain the critically important HIPAA language, and this can prevent your agent from being able to review your medical records or get information about your health from your doctor so your agent can make informed decisions about your care.

Yes, that is what it is intended to do. A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so.  A properly worded power of attorney will give enough power to your agent to do what you need them to do, but also limit your agent so he or she cannot do anything more than you want them to do. A power of attorney will be needed for your agent to act on your behalf with various entities, including banks, mortgage companies, mutual fund companies, the IRS, the Social Security Administration, credit card companies, etc. If not drafted properly, some entities will not recognize the power of attorney and the court may end up involved. This is why you want a competent attorney drafting this important document.