Question: Do I need an estate plan if I have no assets?
Answer: Creating an estate plan involves more than simply determining how your assets will be distributed upon your death. An estate plan allows you to plan for the future in case of incapacity and can provide for care instructions for yourself and loved ones after you die.
At the bare minimum, you should have advance directives and a power of attorney in place. Advance directives include a health care proxy, living will, and HIPAA authorization.
A health care proxy appoints an agent to make medical decisions on your behalf in the event a doctor deems you unable to make them for yourself. The proxy can also include the right for your agent to make decisions regarding end of life, including the decision to withhold or withdraw artificial nutrition or hydration, by stating that your agent knows your wishes regarding those matters. The living will provides instructions to your agent regarding what kind of care you want or do not want to receive towards the end of your life, such as cardiac resuscitation, antibiotics, or dialysis. Therefore, it is important to choose an agent that not only understands your wishes but is also capable of carrying them out. Lastly, a HIPAA authorization allows your agents to speak with your doctors and receive medical information, specifically regarding whether or not you have the capacity to make your own decisions and handle your own affairs.
In addition to creating your advance directives, you may also want to document your wishes regarding your funeral arrangements and your choice of burial or cremation. You can do this by executing an appointment of agent to control disposition of remains. This document can include specific instructions to your agent, including which funeral home to use, what type of coffin you want to be buried in, the type of flowers you want, where you want your ashes to be disbursed, etc.
A power of attorney is a document that allows you to name agents to make financial decisions on your behalf and assist in taking care of your daily financial obligations. This document will be useful should you become incapacitated and unable to handle your financial affairs in the future. Powers that can be given to the agent under this document can include paying personal expenses or purchasing everyday items. The power of attorney document should consist of a broad range of powers so that your agent can act on your behalf, regardless of the circumstances.
Additionally, a power of attorney will be beneficial should you require long term care planning but are unable to apply for yourself. Without a power of attorney, or if you have a power of attorney without the necessary powers, a relative or interested party will have to petition the court to be appointed as your guardian with the powers needed to plan for your long-term care. This process can be costly, time consuming, and invasive into your family affairs. The appointed guardian also must comply with the court’s annual reporting requirements, meaning the court will continue to be involved in your affairs long after the proceeding is completed.
A last will and testament, while notoriously known as a written document instructing your executor on how to distribute assets upon death, serves multiple functions. For parents with young children, a will can name a guardian for their minor children. A will can also distribute assets that are received after your death, such as tax refunds or an inheritance from another estate. In these instances, any checks received will be made payable to your estate. Therefore, an estate account will have to be opened in order to cash checks delivered after death. Your will would control how these funds are to be distributed and to whom.
When determining whether or not you need an estate plan, it is important to think beyond your financial status, and to consider your current and future needs, both before and after death. You should therefore seek an Estate Planning and Elder Law attorney, one who will ask you the right questions and help determine the best estate plan that is right for you.