Frequently Asked Questions about Estate Planning

Why should I pay a lawyer a lot of money for some simple documents?

You can buy software that produces most of the estate planning documents an attorney will prepare for you. Using such documents could turn out all right for you and your heirs, but things could go horribly wrong as well, and you'll never know if you did it right until it's too late. You could end up paying a nursing home unnecessarily or your heirs could pay unnecessary taxes or expend legal fees fighting each other.

Only a qualified attorney can educate clients on what issues they should be aware of in their individual circumstances and then recommend appropriate language to deal with the client's specific situation. Do you have a taxable estate? Do you own significant amounts of tax-deferred retirement plans? Do you know how to fund the revocable trust provided on the computer program? Is there anything about your estate that is unusual, such as having a disabled child? In short, if there's anything about your situation that's not plain vanilla, you need to see a lawyer. And only a lawyer can determine whether your situation qualifies as "plain vanilla." As with joint accounts, the problems you may create by not getting competent legal advice probably won't be yours, but may well be your children's. Do you want to risk leaving that legacy?

Can the attorney-in-fact be compensated for his or her work?

Yes, if the principal has agreed to pay the attorney-in-fact. In general, the attorney-in-fact is entitled to "reasonable" compensation for his or her services. However, in most cases, the attorney-in-fact is a family member and does not expect to be paid. If an attorney-in-fact would like to be paid, it is best that he or she discuss this with the principal, agree on a reasonable rate of payment, and put that agreement in writing. That is the only way to avoid misunderstandings in the future.

How does one draw up a health care proxy?

People should contact an attorney who is skilled and experienced in this area. Many hospitals and nursing homes also provide forms, as do some public agencies.

When does a health care proxy take effect?

In general, a health care proxy takes effect only when the principal requires medical treatment and a physician determines that the principal is unable to communicate his or her wishes concerning treatment. How this works exactly can depend on the laws of the particular state and the terms of the health care proxy itself. A medical directive, whether part of a health care proxy or separate, will be followed when you can no longer direct medical providers yourself.

What if the principal regains the ability to communicate his or her own decisions?

If the principal becomes able to express his or her own wishes at any time, he or she will be listened to and the health care proxy will have no effect.

Who should have a copy of the health care proxy?

The agent should have the original document. The principal should have a copy and the principal's physician should keep a copy with that individual's medical records.

Can a person object to a proposed guardianship for him- or herself or for someone else?

While the rules differ from state to state, someone who is the object of a proposed guardianship has the right to object to the appointment of a guardian. Generally, next-of-kin also has the right to object. In many states, the proposed ward has the right to a court-appointed attorney if she cannot afford one on her own.

Which must I pay first, my federal or state death taxes?

Both federal and state taxes must be paid within nine months of the date of death.