Update The Box

safety deposit boxPamela Yip has written another timely article about “the box” – the storage place where you keep your important documents. The article is reprinted below.

Is It Time To Update Your Secure Box?

By Pamela Yip

Everyone should have “the box.”

That’s the place where you store your important papers, including the documents that spell out what you want done in case you die or become incapacitated.

But don’t stash your papers in the box and think you’re done. And don’t hide it away and forget about it.

You should periodically review all the documents to ensure they’re up to date. That includes a will, financial power of attorney and medical power of attorney.

And be sure you let your children know about the box, where it is and what’s in it. They may need it someday.

“My clients have surprised me and their children when I ask about their box,” said Julie Chapman, certified financial planner at Legacy One Group in Plano. “We have uncovered original stock certificates, some more than 50 years old. We have found paid-up life insurance policies for children, which have been long forgotten. But as advisers, we are particularly seeking items that could affect their future estate.”

It becomes more important than ever to review important documents as you get older.

“Although many estate planning documents should be reviewed from time to time, it is even more important for seniors because of the greater likelihood of disability and death, in addition to other issues that occur as we age,” said Michael B. Cohen, a Dallas elder law attorney.

The documents to review each year are:

Durable power of attorney. This is your most important estate planning document. It appoints someone to step in and act for you on financial and legal matters if you become incapacitated.

The document permits your agent or attorney-in-fact to pay your bills, make investment decisions, take planning steps and take care of your family when you can’t do so yourself.

“Unlike the medical power of attorney, which is only effective if you are no longer able to make your own decisions, this power of attorney has an option: either immediately effective or effective only upon your incapacity,” said Brian Fant, an elder law attorney in Dallas.

The importance of reviewing your power of attorney can’t be emphasized enough.

“Since seniors are more likely to be disabled and since powers of attorney are the most common documents used to deal with assets when one is disabled, powers of attorney would be at the top of my list for most seniors,” Cohen said.

Things to consider: Is the person you appointed as your power of attorney still the right person, or have your assets changed?

Medical power of attorney. This document grants the person you choose the authority to make medical decisions for you when you’re unable to make them yourself.

“Married adults might think they don’t need one because their spouse under Texas law can make decisions for them if they are in a hospital,” Fant said. “But if both spouses are incapacitated, whom do you want to make the decisions? If you want to stay in control of that decision, a medical POA is needed.”

Fant also said it’s critical to list one or two alternates if your first choice is unable or unwilling to act.

John McNair, an elder law attorney at Underwood Perkins in Dallas, said you should ask a key question about the people you appoint: “Are they still the right persons even though you haven’t looked at your documents for the last 10 years?”

Changes in relationships with the main appointee and the alternates may require changing who holds your medical power of attorney. That includes divorce, death of a spouse and relationship issues with children, relatives or trusted friends.

“A medical POA can be revoked at any time by executing a new medical POA or by giving oral or written intent to to revoke the power,” Fant said.

Living will. This document states your wishes about life-sustaining treatments when you reach the point that you can no longer decide for yourself.

“If there comes a time that you are unable to make end-of-life medical decisions for yourself because of illness or injury, this document allows you to stay in control by setting out your directions for treatment preference in continuing or discontinuing life-sustaining treatment,” Fant said. “It applies only if you are incapacitated and suffering a terminal or irreversible condition, as defined by Texas law.”

The only time you may want to update your living will is if your values or religious beliefs have changed, which could alter your earlier instructions, Fant said.

“In the event of a change, the old directive should be revoked in writing, dated and given to your health care providers,” Fant said. “An oral revocation is also valid, as is destroying the old directive, but witnesses to your intent and actions are highly recommended.”

Your will. This makes clear how you want your property to be distributed after you die.

You should review your will because of changes in the law, your health, relationships or assets.

“A couple came to me after remarrying in their 60s,” Fant said. “Both had children from previous marriages and still had the old wills they executed during their first marriages, naming their previous spouse as the primary beneficiary.

“Their wills desperately needed changing for obvious reasons, but their goals and desires for disbursing their assets had also changed,” Fant said.

A legal trust. A trust establishes a legal entity that holds property or assets for the person who created it. The whole idea is to provide for your loved ones after your death. In a trust, you lay out instructions that empower the trustee to manage assets for your beneficiaries.

The key lies in setting up the right trust to accomplish your goals, being explicit in your directions about how the funds are distributed and ensuring that the trust’s assets are invested prudently.

“One of the most common mistakes that seniors make is a failure to fund their trust, which means they fail to retitle their assets in the name of the trust,” Cohen said. “As a result, probate may be needed, and probate avoidance is one of the main reasons why people do certain trusts.”

You also might need to change the type of trust you have because of changes in your health, he said.

“Since laws change, relationships change, your assets change and your health changes, particularly as we age, seniors’ legal health should be probably checked annually by someone who is experienced in that area of the law,” Cohen said. “A failure to review is tantamount to the ostrich burying his head in the sand if you want to protect yourself and the ones you love.”

Inside the Box:

Documents you may want to include in your box:

  • A will
  • Durable power of attorney
  • Medical power of attorney
  • Living will
  • Your home’s deed or mortgage
  • Car titles
  • Life insurance papers
  • Investment records (stocks, bonds and mutual funds)
  • List of passwords
  • Contact information for your financial and legal advisers

Published April 5, 2015 in the Dallas Morning News

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