Why Everybody (Yes, You Too) Needs a Will

Death or a crippling injury could leave your loved ones out in the cold.


Aug. 5, 2008 — -- Imagine you're a young adult, unmarried but living with your partner in a home the two of you bought together. Two months before the wedding, you're critically injured in an automobile accident and later die.

Whom do the doctors update about your condition? Who decides the critical questions about your care? And what happens to the house you bought with the person you expected to share a long life with?

These are all reasons why just about every adult, no matter their age or family status, needs basic estate-planning documents that dictate their wishes if they die or become incapacitated.

Yes, we're talking about a will to detail how your property is distributed. But we're also talking about powers of attorney, living wills and authorizations that allow doctors to share your private medical information with others.

Many people, particularly young adults, think they have no need for a will, much less other documents that outline their wishes in the event of death, illness or accident. Not true.

Nearly every adult, no matter the age or the circumstance, should have these basic documents in place, said Randy Gardner, an estate-planning attorney and professor of tax and financial planning at the University of Missouri-Kansas City.

"No one knows when they're going to die," Gardner said.

And if you die without your own plan, then the state where you live has its own plan -- one that your survivors may or may not like.

The plan is based on what are called intestate laws. These laws vary by state, but generally, they dictate that if a married person dies without a will, the property goes to the spouse. In the cases of an unmarried person with no children, it goes to the parents. And if a married person with children dies, the property is split between the spouse and the children, regardless of age.

In some cases, these distributions may be what the deceased person wanted, but certainly not in every case. And it will be a more costly and time-consuming process.

That's why you want a will and a basic estate plan.

The passage of the Health Insurance Portability and Accountability Act in 1996 set tight restrictions on the release of medical information by health care providers to anyone, including family members, if you're an adult. That's why it's imperative to have an authorization form that outlines whom you will allow a health care provider to share your private medical information with.

In the case of an emergency and no signed portability and accountability authorization form, a hospital may or may not share medical information with a close relative, said Gardner, who also is the education director for Wealth Counsel, a national network of estate-planning lawyers.

"There may be a health care facility or doctor cringing as they do it," he said.

And without the authorization, Gardner said, a loved one you've designated to make medical decisions on your behalf could be in the position of being forced to make a critical decision without access to important information about your condition.

That's why every adult needs a will, a durable power of attorney that designates someone to manage your assets while you're incapacitated, and an advance health care directive.

The health care directive is a set of instructions that outlines your medical care preferences in case you become incapacitated. Generally, it includes two components: a living will and a health care power of attorney, also known as a health care proxy. The living will provides guidance to doctors and relatives on how far they should go to keep you alive in case of critical illness or accident. The health care power of attorney appoints a person to make medical decisions on your behalf if you are unable.

Finally, there is the portability and accountability authorization form.

Gardner said the documents should cost a single person about $500 in total, depending on which part of the country you live. For a married couple, the additional cost would be about $1,000.

Many individuals and couples should also consider, for an extra cost, a revocable living trust that allows property to be distributed outside of probate, thus reducing probate costs.

There are Web sites and software that offer templates for these kinds of documents at a lower cost, but users run the risk that these templates may not apply to their specific situation or unique state laws.

To locate an estate-planning lawyer to help draft these documents, you can check out the Wealth Counsel Web site at www.wealthcounsel.com.

Yes, there will be an up-front cost. But the eventual savings will far outweigh the costs. And your heirs will be thankful you did.

This work is the opinion of the columnist, and in no way reflects the opinion of ABC News.

David McPherson is founder and principal of Four Ponds Financial Planning (www.fourpondsfinancial.com) in Falmouth, Mass. He previously worked as a financial writer and editor for The Providence Journal in Rhode Island. He is a member of the Garrett Planning Network, whose members provide financial advice to clients on an hourly, as-needed basis. Contact McPherson at david@fourpondsfinancial.com.

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