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Kevin Hunt: Are You Prepared To Die? (A Legal Guide)


Kevin Hunt - The Bottom Line

The Bottom Line

February 16, 2013

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Are you ready to die?

Of course not.

But here's a death-and-dying question every living adult should answer: Do you know the difference between a will and living will?

Maybe not. So stop squirming and find out what you should know about preparing for death, either yours or a loved one's.

The Will

Procrastinators should know the consequences of not having a will: You lose control over who gets your assets. Wth no will, the state of Connecticut's Probate Court makes the decisions.

"I ask every single client I have, 'Do you have a will?'" says Michael Agranoff, an Ellington attorney who concentrates in Department of Children and Families cases. "The pitch is, at the very least, the will specifies who you want your minor children to be in the custody of. . . . A will not only disposes of your property but if you have a lot of money it can be a device to legally avoid taxes, too."

Cost: About $200 to $300 (consult any lawyer). Or get a will, living will and power of attorney for $500.

Living Will/Health Care Directive

Do not confuse a living will with a will. A living will is a legal document more accurately described as an advance health care directive that specifies any restrictions on medical care if you become terminally ill, incapacitated or unable to communicate.

If you'd rather avoid life-support systems, certain medical treatment or medication, you'll need a living will. A do-not-resuscitate order, as part of a living will, prevents efforts to revive a patient in cardiac arrest. You can also specify if you wish to donate your body or organs and even if you'd like to be cremated or buried.

A living will eliminates fears of medical malpractice by attending doctors and potential anguish by family members left to decide whether to continue life-support efforts.

"If you've ever seen a 95-year-old hooked up to $100,000 worth of medical equipment," says Agranoff, "you would know a living will is a good idea."

A lawyer can help with a living will as part of any will, but the state provides a basic form (available at 1.usa.gov/10CsKlr) that must be signed and dated, with two witnesses. Though notarization is not required, it's recommended.

Cost: $100-$200

Power of Attorney

Creating a power-of-attorney legal document authorizes someone else to make decisions for you. A POA does not have to be an actual attorney. More often, it's a spouse, child, relative or friend appointed to act if you become incapacitated because of illness.

"It's either for an elderly parent or someone whose financial affairs you have to manage," says Agranoff. "Sometimes it's temporary."

The power of attorney essentially works for you.

A durable power of attorney remains in effect even if you become legally incapacitated. Without a power of attorney, your family might have to seek conservatorship through Probate Court.

So for many people, especially the elderly, it's a legal document worth having.

Cost: $100-$200

Living Trust

In a recent column, The Bottom Line noted a living trust distributes assets while avoiding probate. In some circumstances, such as when people own real estate in other states, that's true.

But Agranoff says it's often a costly, heavily marketed product with little value beyond a basic will.

"All the living trust does is add thousands of dollars of expense," he says. "And you still need a will. Another problem is most people think avoiding probate means avoiding probate taxes, or death taxes or estate taxes. It simply isn't so."

Agranoff has posted on his law practice's website warnings about living trusts and the seminars frequently used to sell them.

Agranoff says a living trust does not bypass Probate Court and that any tax savings are also available through a well-prepared will and other estate-planning tools.

"It has no income tax or estate tax savings," he says. "If it did, everybody would tear up their wills and that would be the end of it."

The first $5.25 million of a estate are exempt from federal estate taxes. In Connecticut, an estate is taxed after the first $2 million.

"How many people have those kinds of estates?" says David Marder, of Marder & DeFelice Law Offices in Vernon. "To spend $3,000 to $5,000 [on a living trust] to get a nice little folder to show what it looks like is very expensive."

Cost: $3,000 to $5,000.

Trusts

Unlike a living trust, a testamentary trust is created as part of a will and activated only on the person's death. A testamentary trust allows a person, even in death, to control assets through an appointed trustee.

"You have people come to you and say," says Agranoff, "'Well, look, when I die I don't want my husband to marry a floozy and give her all the money.' I say, 'Well, I'm sorry, ma'am, you can't give a gift with strings. There's no way to rule from the grave except with a trust'."

A testamentary trust is much cheaper, too.

"Do a simple will or even a simple trust, a testamentary trust, not a living trust," says Marder. "Wills with a simple trust will probably be under $1,500. And you spell out the very same things [you would in a living trust]."

Cost: About $1,500.