Do you have a will? Based on the tax clients of mine I have asked that question over the past few months, you probably don't. If you're under 35 and single, almost certainly not. If I then ask about the other components of an estate plan, such as a health care power of attorney, a durable power of attorney, a living will or a living trust, the baffled looks on most faces suggest I might as well be speaking Hungarian.

People avoid dealing with estate planning for two primary reasons. First, most people don't like to think about their own mortality. When you're young, it is easy to rationalize that "death is for old people" and that you therefore need not be concerned with your own. That's not true, of course. Younger people die in significant numbers, just not from the typical diseases of old age. Leukemia rather than prostate cancer; congenital heart defects rather than arteriosclerosis; driving impaired from alcohol rather than from poor eyesight and slowed reflexes. And that's always other people, never ourselves.

The other reason is the belief that you do not need a will because you have nothing to bequeath. This one might have more validity, except that assets have a way of slowly accumulating. Even if all you have are photographs and dog-eared scripts, the other parts of even the simplest estate plan planning are important because they address the disability and medical decision-making that most typically precedes death.

Who's In Charge?

Let us suppose that you are unconscious and seriously injured in a hospital emergency room. Decisions – important ones – have to be made. Which of two approaches to the surgery should be used? Should you be transferred to a different hospital, which might be better or specialized? If you stop breathing, should you be resuscitated? What about feeding tubes if you're comatose? You cannot make these decisions. Who makes them for you?

The answer depends on your circumstances (and to some extent, what state you are in). The authority to make health decisions is set out by statute if you do not make an appointment ahead of time. Your spouse, if you're married. If not, your adult children. Otherwise, siblings or parents or grandparents. Are your children, siblings and parents here, or scattered about the country? Are you even speaking to them? And most important, would they make the same decisions you would make for yourself if you were able? Do they even know what you would want? Are your values the same as theirs? Would they respect your wishes if you had made them known?

Worse, this rigid list of priorities includes spouses and blood relatives only. The spouse who wants a divorce takes precedence over the brother you are close to. The stepparent who raised you from infancy has no standing. And if you're gay or lesbian, your family can shut your partner out entirely; many do.

Let's move out of the emergency room. You're alive, but the accident or illness has left you either physically or mentally unable to handle your own affairs. Who is going to pay the bills? Manage the real estate? Sign the tax returns? Give informed consent for the next surgery? Assets held in joint tenancy (typically with one's spouse or significant other) can be handled by the joint tenant. If you're married, your spouse can handle many routine matters just the same as if you were tied up at work. But for anything more, someone has to be given explicit authority to act on your behalf. Without written instruction from you, the state requires a guardian be appointed by, and supervised by, the courts. The guardian might be a family member who petitions to be appointed, or it might be an unrelated party selected by the state. The goal is noble, to make sure that the unscrupulous do not prey on the weak and helpless, but the legal procedures, periodic reporting and fees can create quite a burden on those whom you would otherwise completely trust.

Cutting Off the State

State law contains a formula for how your assets are to be distributed if you die without a will. But no state wants to be in the inheritance handling business, so a valid will supercedes almost any statutory formula. Similarly, these other components of a state plan address the financial and health care situations I have described. A health care power of attorney is a standardized document which, reduced to its essence, says, "if I can't make my own health decisions, I appoint X to do so." A durable power of attorney says much the same about all your business and financial matters. You don't have to appoint the same person to each: your sister the nurse might handle health care, and brother the banker the financial matters.

A living will supplements the health care power of attorney. Though not legally binding, it sets out in writing how you want judgment exercised on the difficult medical questions at the end of life: pain management, feeding tubes, heroic efforts to sustain life, and so on. You may trust your appointee to do the right thing, but a reminder of what you consider "right" is useful. Your living will should be in your doctors' files and given to the hospital when you are admitted, so that they have some guidance if your appointee is not there or reachable by phone when trouble occurs.

The last component of a basic estate plan, a living trust, requires a good bit of discussion. That will be my next column.

Are there money or tax questions you would like to see discussed in this column? Let me know, at 2835 N. Sheffield, Suite 311, Chicago, IL 60657, or call 773/5251778 (888/525-1778 toll-free outside the Chicago area) or e-mail greg@gregmermel.com.

Greg Mermel is a certified public accountant whose clients in the arts range from individual performers to major theatre companies and suppliers. He also has been known to produce theatre.

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