The importance of estate planning
Recent legislative action is a reminder that people should take stock of their situation
In the last legislative session, a relatively minor bill (Senate Bill 170) amended the state form for medical advance directives. The durable power of attorney for health care and living will are typically parts of estate plans, and New Hampshire statutes provide the basic form to be used in appointment of agents to make medical decisions for those unable to make their own and to express end-of-life wishes in a living will.
The action taken by the Legislature eliminated a specific question in the documents concerning “artificial nutrition and hydration” and cleaned up other language. Previous to the change, which becomes effective Jan. 1, 2014, people were asked if they wanted artificial nutrition and hydration to be provided to them notwithstanding the fact that they did not want other kinds of mechanical, extraordinary means used to keep them alive if there was no hope of recovery. The Legislature seemed to recognize what others have come to understand since the law first was passed in the 1990s -- that the artificial provision of nutrition and hydration is not particularly different from other mechanical means of preserving physical functions.
All of this points out a need for people to take stock of their own situations. It is amazing how many folks do not have medical advance directives. Without them, theoretically at least, guardianship has to be taken out in order to make medical decisions for those who cannot make them for themselves, and this is an extensive and potentially expensive process, often undertaken in emergency circumstances, when people are distracted by emotional and practical difficulties.
By signing a simple form, individuals can appoint another person to make those medical decisions.
Another directive that is part of estate planning is a durable power of attorney. A durable power of attorney appoints an agent, known as “attorney-in-fact,” to make other decisions or take other actions for the principal, being all the things a person could do other than medical decision-making. Unlike the medical advance directive, a durable power of attorney is effective when signed, unless otherwise restricted, so its use should be supervised carefully if the principal does not wish that power to be exercised immediately.
The durable power of attorney is known as “durable” because it survives disability. Therefore, rather than having a guardianship required for the property and business affairs of an individual to be carried by another, the simple signing of the document obviates the need for such a procedure.
Other typical components of an estate plan obviously include a will, the basic document that provides for the disposition of a person’s assets upon death, names the executor, the person who wraps up the decedent’s affairs, and, for those with minor children, names guardians of the children -- perhaps the most important issue facing young parents if, heaven forbid, both of them were to die.
Often, a “living trust,” more technically known as a revocable inter vivos trust, is part of estate planning as well. This is a document that becomes a separate legal entity to which title to assets of an individual can be transferred during life. This can be advantageous for the management of property during lifetime, should an individual become disabled due to age or accident, and the successor trustee can manage the property.
When such a trust exists, the will leaves everything to the trust and the specific provisions for distribution of assets upon death are set forth in the trust.
One advantage of a living trust is the fact that if all assets are transferred to it during life, the formal probate process can be avoided. New Hampshire has passed several laws allowing for probate to be waived if assets are left to specific individuals or classes of individuals who waive the process, either in whole or in part, In more complex situations, probate usually cannot be waived, but a living trust can make the process of wrapping up someone’s affairs simpler.
New Hampshire has no estate tax at present and has not had one for many years. The federal government, however, has an estate and gift tax. Currently, the exempt amount under the federal estate tax is provided through something called a “personal tax credit.” The amount is pegged to inflation and currently is $5.125 million per person or $10.25 million per couple. Certainly, that is more than this writer needs and more than almost all individuals or couples in New Hampshire require in order to escape tax. However, there are many who are subject to the tax, and everyone needs to keep close watch over proposals to change it.
What does all of this add up to? Everyone needs to consider having an estate plan. Those who have estate planning documents should read them, make sure those people named for various jobs in them are still the ones who are appropriate, and make sure that the dispositive provisions reflect current wishes.
If you have not done it lately, call your estate planning lawyer or find one.
Brad Cook, a shareholder in the Manchester law firm of Sheehan Phinney Bass + Green, heads its government relations and estate planning groups. He also serves as secretary of the Business and Industry Association of New Hampshire.Edit ModuleShow Tags