Preparing your estate for a medical emergency doesn’t have to be difficult.
In fact, with careful planning you can even complete most of the steps in a single afternoon.
While preparing for a medical emergency may seem like a grim topic to cover, it’s a necessary segment of any complete estate plan.
Further, by properly planning for the unexpected, you can offer peace of mind to your loved ones should such a future come to pass.
Generally speaking, there are several ways for Virginia residents to prepare their estates for medical emergencies.
In this article, we’ll broadly cover the six most common:
- Granting Power of Attorney
- Fortifying Your Finances
- Drafting a Medical Directive
- Purchasing Life Insurance
- Writing a Will
- Sharing Your Knowledge
However, you shouldn’t limit yourself to only the information provided in this article.
When putting together an estate plan, the best, and only, advice we can give is to speak with an experienced attorney about your case.
Grant a Power of Attorney to Someone You Trust
A power of attorney is a document which grants someone the power to legally act on your behalf.
Due to their inherent flexibility, granting a power of attorney to a loved one can be an incredibly useful tool for protecting your estate.
For example, you could draft an incredibly limited power of attorney that allows a loved one to carry out a single action.
For example: “you can take money out of my bank account to pay my rent while I’m in the hospital.”
On the other hand, you could also draft a much broader power of attorney which grants wide-reaching powers over your estate.
For example: “you can access my bank account as you see fit in order to protect my interests while I’m in the hospital.”
Basically, the individual named in your power of attorney has full legal permission to perform any action permitted within the document.
Generally, your agent will have limited powers such as in making certain healthcare decisions, exercising your right to vote, or arranging for your burial in the event of death.
Why You Should Consider Granting a Power of Attorney
If you become incapable of managing your affairs by yourself, and you have not established a durable power of attorney, a court may grant control of your estate to a guardian or committee.
The largest benefit of granting a power of attorney is that you are the one who decides who gets to manage your estate.
Further, a power of attorney can limit the authority of the agent in charge of your estate, who must carry out the expectations laid out in your document.
While there are certainly risks involved to handing over control of your estate in the event of a medical emergency, the benefits of such a document often outweigh the negatives of such an arrangement.
This is especially true when a lawyer is the one who drafts your power of attorney, as they can help you establish a sound and reasonable document which best meets your interests.
Fortify Your Finances
You won’t have time to plan out your finances after experiencing a sudden illness or other medical emergency.
Further, such emergencies are often prohibitively expensive, and may even have long-lasting effects which will only raise the cost.
For these reasons, it’s generally a good idea to build a financial buffer to help protect yourself when you’re at your most vulnerable.
In the context of this article, you can generally fortify your finances by following three steps:
- Purchase health insurance
- Build an emergency fund
- Set up a safety net for long-term care
We’ll outline the basics of each below.
Purchase Health Insurance
From a lawyer’s perspective, health insurance isn’t really for paying minor medical bills.
Instead, health care is a useful tool for protecting yourself from medical emergencies which could cripple your financial health for years if not decades to come.
When a few days in the hospital can cost tens of thousands of dollars, having health insurance can be the difference between a manageable bill and bankruptcy.
In this way, the best way to make sure that the medical emergency doesn’t turn into a financial one is to carry at least some form of health insurance.
Build an Emergency Fund
Everyone should have an emergency fund to help deal with unexpected life events.
From a blown water heater to a flat tire, having a fund to draw from for unexpected expenses is incredibly important.
This is especially true if you are out of work for long stretches of time due to an accident or illness.
As a general rule, your emergency fund should cover your living expenses for three to six months. However, anything is better than nothing.
Finally, you should store this fund in an easily accessible account with a high interest return rate (higher than 2% is ideal).
Make sure to write down the account number and other important information, preferably in a place your loved ones know about.
Set Up a Safety Net for Long-Term Care
Accidents and illnesses can quickly change from immediate emergencies into long-term concerns.
Further, long-term care can be incredibly expensive, and can quickly drain your finances.
For this reason, you should consider including some long-term care options in your estate plan in order to mitigate the cost that long-term care has on both you and your family.
As three of the most common, you could obtain a long-term care insurance policy, sell an existing life insurance policy, or obtain a reverse mortgage.
Draft a Medical Directive
“Advance Healthcare Directive,” “Advance Directive,” “Living Will,” and “Medical Directive” are all interchangeable terms which refer to a document that states how you’d like to be treated during a medical emergency.
Unlike a normal will, a living will is a set of directions for how you would like your doctor and family to deal with certain medical situations where you can’t otherwise communicate your healthcare wishes.
As the most common example, a medical directive could establish whether or not you’d like to be put on life support if your life is in the balance.
What About a Medical Power of Attorney?
Even if you’ve already named an acting agent with a power of attorney, it can still be helpful to have a medical directive for certain situations.
Think of a medical directive as a formalized set of instructions for your power of attorney to follow in the event of a medical emergency.
You can also establish a separate medical power of attorney who can take care of your healthcare specifically.
Purchase Life Insurance
Life insurance policies can ensure that your family will remain financially secure should you die unexpectedly.
There are several different types of life insurance policies, and no single policy will cover every possible situation.
For this reason, it’s smart to talk over the issue with an estate planning attorney or other trained individual in order to establish which policy will work best for you.
Write a Will
Draft a will. It’s not hard, and if you have more than $50,000 in total assets it can save your loved ones a great deal of time and effort should you pass away unexpectedly.
Even if you don’t think you own anything of value, you may be surprised at the total value of your estate.
For example, according to the Federal Reserve, the median net worth for Americans between the ages of 45 and 54 is $124,200.
In Virginia, all estates worth more than $50,000 must go through a long and complicated probate process, and individuals who die without a will can leave their loved ones grasping in the dark.
There are many types of wills in Virginia, which all vary in state allowance, validity, and depth.
Virginia Will Requirements
- Age requirement
- Mental capacity
- Writing requirement
- Witness requirement
Basically, in order for your will to be valid, you must be at least 18 years old and of sound mind.
Further, your will must be in writing, and you must sign the will alongside at least two witnesses.
The will itself must also follow all relevant Virginia laws, as determined by the judge or Clerk who is in charge of the probate process after your death.
Make sure to make multiple copies of your will, and store them in a place your loved ones can easily access.
Finally, make sure to update your will periodically to keep up with your changing assets, especially if you move across state lines.
Share Your Knowledge
This is a step that, surprisingly, many people simply forget.
To be quite clear, it’s impossible for your loved ones to carry out your wishes if they cannot find, or don’t know about, your estate planning documents.
As a general piece of advice, find a three-ring binder or a folder and use it to hold copies of all of your important estate planning documents.
Even having a simple list of where your estate planning documents are can be helpful should you become incapacitated.
Having a record of any relevant account numbers, will locations, life insurance plans, and other important estate planning elements can help save your loved ones a great deal of trouble during an emergency.
Further, writing all of this information down in an easily accessible place can help you ensure that your full estate passes to the people you care about should your medical emergency go south.
Regardless of your socio-economic status, a medical emergency can drastically change your life.
However, with careful preparation, you can mitigate the effect that such an emergency might have on you and your loved ones.
Establishing an emergency fund, drafting a medical directive, and solidifying your wishes in a will are all great ways to prepare for an unexpected medical emergency.
However, the best piece of advice, as always, is to speak with an experienced estate planning attorney about your case.