1. Tomorrow is not promised : None of us know how long we are going to live for? Discussing death can feel scary. But if you are to die or were otherwise incapacitated, would your loved ones be able to quickly locate your important information or know how to handle your affairs. We get so busy with the day-to-day life that we fail to make End of the life planning as a priority. One may think they’re too young to be hit with a serious illness or they forget that death has no age criteria. Any of these scenarios can leave a person’s and family member’s life uniquely vulnerable.
This pandemic (COVID-19) is also leaving a devastating effect on people to the extent that many are collapsing or becoming incapacitated. We are having lots of example like where head of the family or the only earning member of the family has passed away or became incapacitated due to unforeseen illness or natural disaster and there is no other person to handle his affairs quickly. This situation can create mess in your family after your demise or family have to face greater challenges.
Every person questions himself about what will happen with his dependents and family members after his death and can plan in advance. Addressing legal and financial issues associated with dying is important for several reasons. Proper planning helps avoid many of the problems associated with End of the Life and future planning for them and their dependents.
2. Need of End of the Life Planning : No one can truly plan for the disaster whether it’s an unforeseen illness, a natural disaster, but can put into place a series of contingencies and plan accordingly. When the person becomes incapacitated or passes away, it is necessary to plan for the emergency to save time, money and stress for the loved ones. It depends on the person’s wealth and what he do to make planning. The reasons for having the End of the Life planning in place before it is needed are endless.
End of the Life planning can helps in avoid many problems associated with succession and transfer of ownership. It protects your assets from going into the hands of unintended beneficiaries & determine who will manage your estate and also protects young family members who are not ready to take the ownership. This planning eliminates the family mess after your demise and avoid greater legal challenges. If you take the steps now to get your estate in order and plan for the future, it can make a stressful time potentially a little easier. People take life end planning as making the Will and by making a will they think that they have planned for their end. But scope of this planning is not limited to only making a will or note. This planning will includes:
3. The End of the Life Planning Process : A person can plan the Legal as well as financial affairs in case of any sudden disability or death happens. The process would be depended on many factors such as Number of family members, Occupation of the person, Legal heirs, Wealth of the person, Assets and liabilities of the person. Though the planning will always be differ in every cases. However, we are discussing the End of the life planning related to legal and financial affairs to be done by a person :
i. Health and Life Insurance : First step to planning for contingencies is having insurance plan which provides financial protection. There are many type of insurance plan available related to insurance which vary on case to case basis as per need having its own relevance. Following options could be choose by a person while planning for contingencies related to health and life for himself and family members:
ii. Estate Planning: Estate planning involves making plans for the transfer of your estate after death. Estate is the combination of everything that you own — your home and other real estate, current and savings accounts, deposits, investments, insurance, jewellery, vehicles, furniture, personal possessions and so on. An estate planning is making a detailed plan of the division of the estate in advance (who, what, when, how and how much), amongst the ones you want to give after his demise. This planning includes:
iii. Health Care Directive/Living Will: A health care directive or living will is a written document that informs other of your wishes about your health care measures should be taken to prolong your life in case you become incapacitated and unable to speak on your own behalf. The person creating the health care directive must be of sound mind at the time the document is signed. This document will only take effect if you become incapacitated and will be useful if you wish to have someone else make your health care decisions. Accidents that result in incapacitation may occur at any time, and without such a document in place, it is possible that your life might be artificially extended against your will. In such circumstances, your directive may state that you want someone other than an attending physician to decide when you cannot make your own decisions. It will also include- Donation of organs, tissues and eyes, Funeral arrangements etc.
iv. Conservatorship/Guardianship : A conservatorship (or guardianship) is a complicated court arrangement that gives an individual legal power over the financial affairs of another person. Conservatorship arrangements are pursued only when an individual is judged (by a court) to be longer capable of managing his or her own affairs (e.g., someone in a coma or in the advanced stage of Alzheimer’s disease). Conservators can be friends, family members, or court-appointed individuals from state agencies. Conservatorship works to safeguard the affected person’s financial assets by making sure that bills are paid on time, that money is allocated for savings, etc. Conservators can also help when the person they are watching out for is unable to weigh the risks and benefits of important financial decisions. The court-appointed conservator is required to make regular reports to the court regarding expenditures. Special permission may be required before any major financial decisions are made on behalf of the incapacitated individual, including the purchase or sale of major assets such as a house.
v. Power of Attorney: A power of attorney is a legal instrument that allows the person creating it to appoint a trusted individual to act on their behalf. A valid power of attorney expires once the principal dies. However, it will allow your trusted person to continue acting on your behalf even if you become mentally incompetent and unable to communicate. For example- If you appoint one of your family member as agent when you are alive, then that member will be legally permitted to pay your bills, manage your investments, file your taxes, sell your real estate properties, and more. However, those powers are no longer legally valid after you passes away.
vi. End of the Life Folder : We all do some planning about life end but fails to keep them systematic and make them available to the loved ones or family when they need it. No planning is complete without documentation therefore after doing this much planning, now it’s must to document all these planned details & information in one place. We call it as “End of the Life Folder”. The purpose of this folder is to have another layer of preparation for your loved ones in the event of your death, especially if it’s unexpected. An End of the Life folder is a tool to help you organize and keep all of your most important financial details and documents at one place. First, you have to determine how you’re going to organize your folder. It can be kept as physical folder or digital folder or both. Then a checklist to be prepared that include important documents and information to be included in this folder. This checklist will be prepared keeping in mind to include everything including financial and legal affairs & documents, which the person wants the family or loved ones to know about. Make sure you leave detailed instructions for your loved ones so they know how to access your files, especially if you’re storing it electronically. Hereunder are some examples of documentation that could be included in your in case of death file:
Now after preparing folder, let your loved ones or family know that it exists. Tell them as part of your estate planning process, you’ve taken the steps to ensure everything is ready for them when the time comes. It is really important to keep it up-to-date (record the most recent date of any changes). It’s also common for people to make a copy and give it to their consultant or financial planner.
4. Conclusion : Thinking about your death or that of a loved one can bring up plenty of unpleasant emotions, but having a plan to take care of the details can ease some of the stress in a time of grief. Making decisions and setting an End of the Life plan in place now will ease some of the stress for your family and prevent them from making poor or rushed choices when they are in a time of shock or grief.
CA Deepak Khandelwal (FCA, M.Com, CCCA, FAFD)
CA Shilvi Khandelwal (DISA, LLB, FCA, B.Com)