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The Basic Legal Documents of Senior Planning

The documents every senior client should have, and why they?re necessary.

By Richard A. Dulisse, CLU, ChFC, MSFS, LUTCF

A working knowledge of the basic legal documents of senior planning is important to you as a financial services professional because it:

  • provides you with effective approach material that can help you schedule an interview with a prospect
  • enables you to more readily ascertain details of the prospect’s estate plan and life insurance needs
  • allows you to build your reputation and professional prestige

The four basics
Four documents, which must be drafted by a licensed attorney, are needed to facilitate responsible planning for senior clients. These are:

  • a durable power of attorney
  • a living will (advance directive for health care)
  • a health-care power of attorney
  • a last will and testament

A brief overview of these documents will give you a basic understanding of their purpose and describe how they fit together to achieve a senior client’s planning goals and objectives.

1. Durable power of attorney – This grants authority to a designated person or agent to act on behalf of a principal or client for specified purposes if the principal is physically or mentally incapacitated. Although a general power of attorney is similar to a durable power of attorney, it becomes invalid if the client is incapacitated. In many instances, this is the key time when the agent needs the power to deal with the client’s property. A durable power of attorney facilitates quick action and avoids unnecessary court intervention that may be needed to act on a client’s behalf.

Example: Assume your client owns a sizable stock portfolio. When the market becomes extremely volatile, signaling a time to take profits, he suffers a stroke. A general power of attorney is useless in this situation. However, a durable power of attorney is designed for just such circumstances. If your client has a durable power of attorney and your client’s daughter is the agent, she can legally sell the stock on the client’s behalf to preserve profits.

It is estimated that nearly three-fourths of all adults have no personally drafted will in place.

2. Living will (advance directive for health care) – A living will is a legal document that describes the types of medical treatment your client does or does not wish to receive. The purpose of a living will is to let others know of your client’s medical wishes if he is terminally ill or in a vegetative state and unable to communicate.

3. Health-care power of attorney – Although a living will expresses your client’s medical treatment wishes, it does not guarantee that these wishes will be carried out. Someone still has to make the decisions regarding whether to continue treatment. A health-care power of attorney is a signed and witnessed legal document in which your client can designate a person (proxy) he wants to make important medical decisions about his care. Given the difficult nature of a decision, which could result in the termination of treatment and death, serious thought needs to be given to naming the proxy.

4. Last will and testament – A will is a legal document that specifies how your client’s property will be distributed after his death. A properly drafted will can reduce estate administration costs, taxes and creditor costs.

Why have a will?
There are many reasons why your client should have a properly drafted will. Personally, he can select the relatives and friends to whom he wants his property left. He can also reward faithful service by employees, and also leave something to his church, temple, school or other charity.

Financially, he can avoid the undesirable consequences of dying without a will, which is called dying intestate. Every state has intestacy laws that essentially direct the manner in which your client’s assets are to be distributed in the absence of a personally drafted will. Most people think that in the event of a husband’s death, everything automatically passes to the wife, but this is not the case.

For example, if your client is married, has several minor children, and owns a business interest exclusive of the spouse, dying intestate will, in most states, dictate that one-half to two-thirds of that business interest (or its equivalent value if liquidated) be given to the minor children. Then, since minor children cannot own property, a court has to supervise the management of the business interest (or the liquid assets from its sale) on behalf of the children until they reach majority age. This can hurt the operation of the business, deprive the spouse of spendable assets and generate numerous court appearances. All this can be avoided by personally drafting a will that directs the disposition of your client’s assets according to his wishes, not those of the state in which he reside.

Although a will is a primary instrument in the formulation of an intelligent and comprehensive estate plan, it is estimated that nearly three-fourths of all adults have no personally drafted will in place. By establishing a working relationship with several elder-law attorneys, you can serve your clients as a valuable referral resource for helping them to implement all these important legal components of senior planning.

Richard A. Dulisse, CLU, ChFC, MSFS, LUTCF, is an LUTC author and editor, and a member of NAIFA-Greater Philadelphia. He can be reached at


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