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Estate Planning Documents and Medicaid Planning

The conversation that you have with an estate planning attorney, when you are in your thirties with a new house, young children, and many years ahead of you is different than the one you’ll have when you are much older, maybe just before you retire. The estate planning attorney will know that you are about to enter a time in your life, when the legal documents you prepare are more likely to be used, says the article “Learn about legal documents and Medicaid” from the Houston Chronicle.

It should be noted that everyone needs an estate plan at any time of life, so they may state their wishes for how assets are distributed and name a person who will speak in their behalf, in the event of incapacity because of an illness or injury. Long term care concerns require a discussion of Medicaid.

An estate plan also includes a power of attorney, so someone you chose can serve as your agent to transact business and handle your financial matters. There should also be a declaration of guardian, in the event of later incapacity and a HIPAA medical authorization document. In some instances, a designation of remains is prepared in order to name an individual who will be the appointed agent to care for the body at the time of death.

However, there’s another reason why you’ll need to meet with an attorney at this time. As we get older, the need to address long term care becomes more important. Making the right decisions now, could have a big impact on the quality of your retirement and your later in life medical care.

If you have not updated your will or your powers of attorney, specifically a durable power of attorney for property, it would be wise to do so now. You will need a document to clearly authorize your agent to deal with assets for Medicaid Planning. Any documents that are out of date, or in which named agents have predeceased you, won’t be effective, leading to problems for you and your heirs.

The document may also need to include a broad gifting power for your named agent, so assets can be transferred out of the estate. If this detail is overlooked, the agent may not be able to protect your assets.

This is the time when you may want to take steps to protect your children upon your death or upon the death of the second parent. If your goal is to eliminate assets to be eligible for Medicaid coverage, this planning needs to be done well in advance. In numerous states, there are state administered programs that pursue recovery of assets when a person has received Medicaid benefits.

Your attorney will be able to work with you and your family to address your specific situation. It may be that your estate plan will include trusts, or that certain assets need to be retitled. Meet with an estate planning attorney who is familiar with your state’s laws. And don’t procrastinate.

Reference: The Houston Chronicle (April 19, 2019) “Learn about legal documents and Medicaid”

 

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Property Transfers and Gift Taxes: Estate Planning Basics

As we age, our needs change. That includes our needs for the property that we own. For one person, the family home was rented to the daughter and her spouse as a “rent-to-own” property. This is generous, since it gives the daughter an opportunity to build equity in a home. The parent had questions about what kind of a deed would be needed for this transaction, and if any gift taxes need to be paid on the gift of the house and a separate parcel of land. The answers are presented in the article “Dealing with property transfers and gift taxes” from Chicago Tribune.

For starters, there are tax advantages while the person is living, since the home is an investment for the owner, as described above. On the day that the home is deeded over to the daughter, she will own the home at the cost basis of the parent. Here is why. The IRS defines the “cost basis” of a real estate property as the price that the owner paid for it, plus the cost of purchase and any fees associated with the sale plus the cost of any new materials or structural improvements.

When you give someone a home, they receive it at the price that was paid for it plus these costs.

Let’s say this person paid $50,000 for the family home, and it’s now worth $100,000. If you give the home to a family member, it’s as if she paid $50,000 for it, not $100,000. There may be tax consequences when she goes to sell it, but that’s in the distant future.

It’s different if the home is inherited. In that case, if the house was valued at $100,000 on the date that the owner died, the heir’s cost basis would be $100,000. However, if the heir sold the property on the exact same day (this is an unlikely scenario), there would be no tax owed on the sale for the heir.

This is a very simplified explanation of how a home can be passed from one generation to the next. It would be best to speak with a good estate attorney, who can evaluate all the factors, since every situation is different. One suggestion might be to put the property into a living trust, in which case the daughter will still pay rent to the parent, but then would inherit the property when the parent died.

The estate planning attorney could use the same living trust for the separate parcel of land. Once the home and the land are deeded into the living trust, the owner can state her wishes for how the properties are to be used.

As for the question of gift taxes, anyone can give anyone else $15,000 per year, with no need to file any forms with the IRS or pay any taxes. If you give someone more than $15,000 in one year, the IRS requires a gift tax form with the federal income tax return.

A meeting with an estate planning attorney is the best way to ensure that the transfer of a family home to a family member is handled correctly and that there are no surprises.

Reference: Chicago Tribune (April 23, 2019) “Dealing with property transfers and gif

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Senior Living – How to Start the Process of Moving

When you have a close relative or friend who might benefit from moving into a development for aging adults, you might not know how to go about getting from where he is now to settling him into the community of his dreams. Everyone’s situation is different, and you should do what is appropriate, but it can help to have a few pointers on how to start the process of moving into senior living.

Getting the Family Involved

https://www.parkertrustlaw.com/family-relationships-mess-up-estate-planning-ask-an-estate-planning-lawyer/You should not try to handle everything on your own, if there are other family members who can shoulder some of the responsibility. Taking on the project of getting your aging relative moved into assisted living can be exhausting. Doing all this by yourself can also create resentment and suspicion among your siblings and other close relatives. Your family members should all have input into the many decisions this move can generate. It is easier on everyone, if the family can work together amicably.

At the family meeting, you and your family need to agree on who will be the point of contact for the senior living center. Your family might need to designate one person to be the decision-maker, particularly if your aging relative has cognitive decline or a condition like Alzheimer’s disease.

Some families split up the duties, with one person handling medical decisions, another person taking care of insurance issues and another managing the loved one’s finances. Whenever possible, you should have at least two people looking over the bank statements, investments, payment of bills and other financial matters.

Doing Your Homework

Your older loved one will likely have many questions about senior living centers. You should educate yourself on the details of several facilities, so you can answer her questions. After you find at least three developments, pore through their websites and then take a tour of each center.

Having the Conversation

Some people start with this step, but you really should have a grasp of the options available for your loved one before sitting down to talk. You need to collect the information to answer her questions.

Jot down some questions you anticipate your loved one will ask – an informal FAQs list. Ask the questions when you tour each senior development. When you feel you have enough information to respond to the questions you anticipate, then sit down with your aging loved one and “have the talk.”

Develop a Plan

The conversation does not have to end with your loved one going into assisted living immediately. If he is angry or upset about moving into a senior community, give him a little time, as long as he is not in danger while continuing to live in his own home.

You should have a plan, but that plan could be that you will tour three facilities and then sit down and talk again in six months. If things change in the meantime, you could revisit the topic before the six months are over.

If your aging relative wants to go forward, you could set up a plan that covers these topics:

  • Touring at least three developments initially.
  • Talking about what your loved one liked and did not like about each location.
  • Finding several more facilities to tour, tailored to your relative’s preferences.
  • Asking the centers you visit for a list or brochure about the steps a senior needs to complete, like selling the house, packing, and moving, to make the transition from the family home to a senior development center.
  • Go over the list with your loved one and family members to distribute the work equitably among everyone.

Talk with an elder law attorney in your area about any insights or experiences he or she may offer. Before signing a contract with a facility, have the attorney review it for your loved one.

References:

A Place for Mom. “Having the Conversation” (accessed April 14, 2019) https://www.aplaceformom.com/planning-and-advice/articles/having-the-conversation

 

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Why is Angelina Jolie Leaving Her Total Estate to Just One of Her Kids?

Angelina Jolie has made the decision to reward her son Maddox for supporting her during her divorce from Brad Pitt. Jolie wasn’t happy that only one out of her six children totally sided with her in the couple’s divorce. Others close to the Jolie/Pitt family say that Brad is upset with Jolie for leaving the other children out and treating Maddox as her “Golden Child.”

Hollywood News Daily reports in its article, “Angelina Jolie Plans To Leave Son Maddox Millions Ignoring Other 5 Children Per ‘Radar’” explains that the final estate planning decision to will Maddox her empire was made by Jolie because of his loyalty.

“Brad is in an absolute fury and fit to be tied over Angie’s moves!” revealed the insider. “It finally seemed like they were reaching some kind of compromise with the divorce. But he’s been blindsided by this mess over Maddox.”

In September of 2016, the story surfaced that Jolie decided to file for divorce from Pitt, after becoming increasingly worried about his parenting methods. The news reportedly followed a nasty encounter between Brad, Angie and Maddox that put the family through one of the nastiest celebrity divorce and custody battles in recent memory.

Jolie claimed that Pitt allegedly attacked Maddox during the fight. An investigation was made by the Los Angeles County Department of Children and Family Services, but no charges were filed. However, according to a family friend Brad remains very upset by the entire situation and especially angry with Angelina for not setting the record straight.

Brad feels that his other children are getting short-changed, and he won’t permit it, the friend says.

Brad Pitt is angry that Jolie would treat their children so differently, cutting out Pax, Zahara, Shiloh, and 10-year-old twins Knox and Vivienne. Leaving it all to Maddox, is just wrong in Brad’s view.

“Maddox took his mother’s side in the divorce, and now she’s made him the head of her movie empire,” said the insider.

“He’s her golden boy, but Brad feels someone needs to remind her that she has five other children!”

If this rumor winds up being true, then most likely Pitt and Jolie will continue to wage brutal battles regarding the welfare of their children for years to come.

Reference: Hollywood News Daily (April 24, 2019) “Angelina Jolie Plans To Leave Son Maddox Millions Ignoring Other 5 Children Per ‘Radar’

 

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Kids Going to the Mom and Dad ATM One Time Too Many?
Finger Pressing Button on Calculator --- Image by © Royalty-Free/Corbis

Kids Going to the Mom and Dad ATM One Time Too Many?

Parenting is supposed to be a process of teaching children how to be self-sufficient. However, it’s not always easy to go from being dependent on parents to being independent. If you think you’re still doing too much, says Newsday, you need to ask “Good to Know: Are your grown-up children taking advantage of you?”

Plenty of parents don’t know what to do when they are asked too many times for too many financial favors. They may feel pressured to agree, worried that they may see their grandchildren or their children less, if they say no. That’s a bad reason for generosity. If the parent is asked to co-sign for a large purchase, like a home or a car, they need to put the brakes on and discuss this thoroughly with their child. It may also be a good idea to speak with an estate planning attorney, for an objective viewpoint.

There needs to be recognition of the child’s creditworthiness. Have they borrowed money from their parents or other family members and failed to pay it back completely, or made only partial payments, and only after being reminded repeatedly? Don’t expect behavior to change. Parents facing this example also need to discuss this between themselves. They should only “lend” money that they can afford to lose.

If the child has been turned down for credit through regular financial channels and the bank of Mom and Dad is the only option, find out why. Ask them for a credit report and be transparent about your concerns. Can you afford to pick up the mortgage payments, if the child fails to make them? What about car loan payments?

Taking advantage of parents can extend past money. Some families welcome their grandchildren with open arms for unlimited times. However, if you find yourself babysitting on weekends and several week nights during the week, it’s time for a discussion. For one family, whose son was interested in spending time with a new fiancé more than with his two toddlers, the situation went on for nearly a year, until the parents gathered the courage to speak up.

They added up all the time they were spending each week taking care of the children. It turned out that they were watching the children for fifteen hours or more each week. This was discussed calmly. They then made it clear that they were happy to continue caring for the children, but for a far more reasonable period of time.

If you feel that your children are taking advantage of you, you’ll need to have a discussion in a calm and reasonable manner. If there are financial matters that are spinning out of control, speak with your estate planning attorney about how to create a plan to stop the flow of money. Elder financial abuse sometimes begins as a “favor.” However, it can escalate, if it is allowed to grow unchecked.

Reference: Newsday (April 14, 2019) “Good to Know: Are your grown-up children taking advantage of you?”

 

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Why Do I Need an Executor?
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Why Do I Need an Executor?

What would happen if someone you were close to, asked you to be their Executor? Would you be honored, or would you be uncomfortable with the responsibility? What do you need to do, when do you need to handle these tasks and how much time will it take?

These are the questions often asked about the role of an Executor, as reported in The Huntsville Item in the article “Role of an executor.”

A person having a will prepared is called the “Testator” if male and a “Testatrix” if female. The person they appoint to take care of distributing their assets and carrying out the instructions in their will is called the “Executor” if male and the “Executrix” if female. That person also pays the estate’s debts and taxes. Note that the debts and taxes are not paid from the Executor’s personal accounts, but from the proceeds of the estate.

The Executor has several responsibilities and power. Therefore, it’s important to choose an individual who is organized, good with finances and knows how to get things done. An Executor could be a person or an institution, like a bank. Here are some things to consider when selecting an Executor:

  • Are they good with handling their own personal business?
  • Do they have some familiarity with your business, finances and property?
  • Are they willing and able to act as your Executor?
  • Do they have the time to devote to serving as Executor?
  • Can they work with your estate planning attorney and your accountant?
  • If you own a business, will they be able to keep it going during a transition period?

There should always be a Plan “B” and perhaps even a Plan “C,” if the first person you wish either cannot or will not serve as Executor. If you do not have a Plan “B” or “C,” the court may name an Executor. That may be a person you don’t know, who does not know you, your family or your business.

The Executor’s tasks vary, depending upon the laws of the state. However, in general, these are the Executor’s tasks. Note that an estate planning attorney usually assists with this process.

  • The will is probated, which requires filing an application with the probate court in the decedent’s jurisdiction.
  • The court issues Letters Testamentary to the individual designated in the will as the Executor.
  • A general notice is given to unsecured creditors within 30 days of being appointed Executor.
  • Notice is given to each secured creditor, by certified or registered mail.
  • Documents need to be gathered, including insurance policies, bank statements, income tax returns, car titles, leases, home deeds, home titles, mortgage paperwork, property tax bills, birth, death and marriage certificates and unpaid bills.
  • The post office, relatives, friends, employers, insurance agents, religious, fraternal, veterans’ organizations, unions, etc., all need to be notified.
  • The personal property of the estate needs to be collected, preserved and appraised.
  • The residence needs to be secured and maintained, including a review of insurance coverage.
  • An inventory of the estate’s assets needs to be prepared.
  • The Executor needs to apply for Social Security benefits and an employee identification number (EIN) for the estate’s bank account.
  • Once the EIN number has been created, open a bank account on behalf of the estate and pay all valid debts from the estate account.
  • Determine any tax liability and prepare for a final tax return to be filed.
  • Distribute the assets and property of the estate, according to the directions in the will.

Usually the estate planning attorney handles many of these tasks and works closely with the Executor. Some Executors are compensated by the estate for their time and effort, but that is not always the case. Talk with your estate planning attorney in advance, about any compensation for your Executor.

Reference: The Huntsville Item (April 13, 2019) “Role of an executor”

 

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Advance Care Directive Protects You and Your Family
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Advance Care Directive Protects You and Your Family

Advance Care Directive – Imagine yourself in the intensive care unit of a hospital after a major stroke or heart attack. Doctors aren’t sure if you are going to live or die, and if you do live, they’re not sure if you will be able to recognize or interact with family and friends.

Do your loved ones know what your wishes are in this situation?

There is simply no way to know when a sudden health event or an accident could render a person unable to communicate, advises The Advocate in the article “If you were on death’s door, what happens next? Advance care directives can make sure that your wishes are carried out.”

When you are not able to speak, you can’t tell loved ones that you’ve had a good life and you are okay with letting go, or if you want to fight to stay alive, no matter how invasive the process may be.

That’s why you need an advance care directive. Anyone over age 18 needs to give this some thought and then take the next step and have the necessary document prepared. It’s a good idea for anyone over age 18 to have a will prepared as well, especially if they own a home, car or have personal property they would like to pass along to any specific people.

The second part of advance care is to name a person as your health care power of attorney. That person will be in charge of making medical decisions when you cannot. People typically name their spouse, but that’s not always the best option. An honest assessment of how your spouse responds during an extremely emotional crisis needs to be made. It’s possible that you may be better off naming a trusted friend.

Here are the steps to follow for Advance Care Planning with an advanced care directive:

  • Identify someone who will take on the role of health care power of attorney.
  • Reflect on your values and beliefs and what living well means to you personally.
  • Consider religious, spiritual, or personal beliefs and how they align with your end of life wishes.
  • Share your decisions with the person you wish to take on the role of health care power of attorney.
  • Make sure that person is able and willing to carry out the duties, even if the family or other people feel opposite of your wishes.
  • Meet with an estate planning attorney to document your health care power of attorney.

While you are attending to creating an advanced care directive, speak with the estate planning attorney about having a will and a power of attorney created. Once these documents are taken care of, you and your family will be better protected, in the event of an unexpected tragedy.

As time goes by, the people you have chosen for these roles may age or your relationship with them may change. Every now and then, check in with them to ensure that they are still willing and able to handle the responsibility of an advanced care directive and power of attorney.

Reference: The Advocate (April 14, 2019) “If you were on death’s door, what happens next? Advance care directives can make sure your wishes are carried out”

 

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The Big Problem with Do It Yourself Wills
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The Big Problem with Do It Yourself Wills

An estate planning attorney would much rather not see a family undergoing unnecessary stress and expenses. Do it yourself wills and on-line wills very often create problems for families, as reported in Next Avenue’s aptly-named article “The Problems With Do-It-Yourself Online Wills.”

The article reports that one DIY estate planning service had three different “packages” that consisted of the same document, just with different names. Those packages were also missing a key estate planning document that the average person would not know to ask about. Even attorneys who do not practice estate planning law, know to work with an estate planning attorney for their wills.

For those with complex financial and personal lives, a DIY service may not be able to address the estate planning issues. If you have over a certain level of assets, do you want to risk making a costly blunder that would easily be prevented by working with a skilled professional?

Think of it this way: there are some people who can have their taxes done online, because they receive simple tax forms from their employer. If there’s a mistake, the IRS sends a letter and they may have to pay a penalty or pay the taxes that were not paid properly. Simple, right?

If your estate plan doesn’t work, you’ll never know. However, your loved ones will, and they’ll be the ones to have to make things right.

Good estate planning is all about expressing our wishes. The documents that are prepared and the process of decisions about our wishes accomplish a number of tasks:

  • Avoids court intervention in your family’s life,
  • Reduces administrative confusion, and
  • Reduces or eliminates unnecessary fees and delays.

The four basic planning documents are: a will, power of attorney for financial matters, an advance health care directive and if needed, a trust. If you expect to use any of these through a DIY website, expect to use a “fill in the blank” approach. Remember that every state has its own laws governing probate. Are you sure that the forms you are filling out are acceptable in your state?

Other DIY sites have some documents, but only if you purchase a high-end package. Others offer attorney consultations, but some consider an attorney consultation to be a series of questions and answers through an online app with pre-written responses, and not a real attorney.

The problem with DIY wills, is that we don’t know what we don’t know. We may know who we would like to receive our assets, but not what our state law requires to make that happen. Case law about estate distribution and probate is not something an average person knows. That’s why it makes more sense to speak with an experienced estate planning attorney. They will be able to create an estate plan based on knowledge and skills, that come about only after practicing in this area of law.

Reference: Next Avenue (March 29, 2019) “The Problems With Do-It-Yourself Online Wills.”

 

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When your spouse cheats on you financially.

You have worked hard, planned and saved to have a comfortable retirement together. Then, one day, something happens that makes you question whether your spouse is being honest with you about money. There might be a perfectly innocent explanation, or your spouse might be leading a double life that poses a threat to your financial future. Here are some suggestions about what to do when your spouse cheats on you financially.

Reasons That Spouses Hide Money from Each Other

Many different factors can motivate a person to hide money from a spouse, such as:

  • Planning to separate from the spouse and building up a nest egg to fund the new path in life,
  • Paying for activities, like gambling or drugs,
  • Lack of trust because of an experience with a previous spouse,
  • Has not paid taxes or other bills, and is stockpiling money instead,
  • Is having an affair, or
  • The current relationship is dysfunctional and the “hiding” spouse feels the other spouse is a control freak about the finances.

How Spouses Hide Money from Each Other

There is no end to the ways people can take money right under the noses of their significant others. Here are a few examples:

  • Selecting the “cash back” option, when paying at the grocery store, gas station or other places,
  • Taking money that is supposed to pay for other things, but keeping it,
  • Not telling a spouse about a raise or bonus, scratch-off ticket winnings and other unexpected money,
  • Hoarding cash, gold coins, or other valuables and hiding them in the garage, attic, office or a storage unit, and
  • Selling items online and not telling one’s spouse.

How to Avoid Financial Infidelity

Many people have an underlying communication problem, and money can be a particularly uncomfortable topic. Ignoring this situation will not make it go away. Experts offer these tips to make sure that you and your spouse are honest with each other about money:

  • Both parties should handle the financial management tasks. When one person controls all the finances and the other person merely signs papers without reading them, you have a recipe for disaster. No matter how much you might dislike dealing with the bills and other financial matters, you have to protect your future, so that you will not be destitute when you retire. Alternate the bill-paying chores monthly or quarterly.
  • Give your financial picture a check-up twice a year. You should both pull your credit reports twice a year and go through them together. Doing this prevents your spouse from having secret bank accounts or investments.
  • Agree on a budget and retirement plan together.
  • Get copies of the tax returns and statements from the retirement accounts, investments, and bank accounts right away, if you suspect that something shady is happening.
  • Know the signs of financial infidelity. If your spouse is over-controlling or is unwilling to talk about money, you need to get to the bottom of the situation. If the accounts are lower than you thought they should be, or your spouse has changed her wardrobe, lost weight, or has new expensive hobbies, you need to ask questions.

An elder law attorney can help you protect yourself financially.

References:

AARP. “When Your Spouse Cheats on You – Financially.” (accessed April 11, 2019) https://www.thegirlfriend.com/money/spouse-cheats-fina

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Here’s Why You Need a Health Care Directive
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Here’s Why You Need a Health Care Directive

Advance health care planning comes into play, if a person becomes incapacitated, whether that status is permanent or temporary. This is part of a comprehensive estate plan, and why you’ll want to take care of this before something occurs. That’s the recommendation from the McPherson Sentinel article “Advance health care directives important to all adults.”

Documenting your wishes about future health care lets a cognitively healthy person express their wishes with a clear perspective. Unfortunately, only one in four American adults has their advance health care directive in place. Many wait to begin the planning process, until they are in their 50s or 60s. The problem is, life doesn’t have a plan. At any time in life, tragedy can strike. A serious illness or an accident can occur, and leave the family wondering what the person would have wanted.

The most common advance directives including a durable power of attorney for health care, living will, and pre-hospital do not resuscitate directive, known also as a “DNR.”

The durable power of attorney for health care allows you to name a person to make medical decisions for you, in the event you cannot. They are also referred to as a “medical power of attorney” or “health care agent.”

This is different than a durable power of attorney, which gives a person the right to act as another person’s agent and conduct all business and financial matters on their behalf.

It’s very important that the people you name to fulfill these roles are told that they have been named. They need to fully understand what your wishes are, what kinds of treatments are and are not acceptable for you, your preferences for doctors and where you would like the treatment to take place.

If you live in a small rural town that does not have specialists, and there is a hospital nearby that offers excellent care, your durable power of attorney for health care can include your wish to be taken to the hospital to receive more specialized care.

The person selected will need to be trustworthy and have the ability and willingness to communicate your wishes, even if family members don’t agree with your choices. They will need to follow your wishes, even if they are not the same as their own.

Keep family dynamics in mind. If a younger sibling is selected to be your health care agent and they have been dominated throughout their life by an older sibling, will your wishes be honored, or will they become the subject of an extended argument?

A living will is a document that details the type of care you want to receive at the end of life. It explains your wishes about accepting life-sustaining procedures, like being placed on a ventilator, receiving artificial nutrition and hydration, if at least two physicians deem that your condition would otherwise be terminal.

These documents should be prepared for you as part of your overall estate plan, with the guidance of an estate planning attorney. Be aware that the laws vary from state to state, so you’ll want to work with an attorney who knows your state’s laws. If you relocate to another state, you will need to have your estate plan updated to ensure that it is still valid.

Finally, make sure to tell several people about these documents, and have the health care documents located in a place, where they can be easily found in an emergency. If you keep them in a bank safe deposit box, it is unlikely that they will be found in a time of crisis.

Reference: McPherson Sentinel (April 17, 2019) “Advance health care directives important to all adults”

 

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