We Americans are an optimistic bunch. Despite our economic downturn, the majority of us are optimistic about our futures and being in control of our lives.

Our optimism bleeds into our personal outlook for the future. It’s why we’re not fearful to drive our cars, fly in planes or drop our children off at school. Because we fully expect to live a long, happy life, we make vacation plans a year ahead of time, and save for our retirements which can be decades away.

But hoping for the best shouldn’t keep us from preparing for the worst. An email I received recently served as a good reminder.

Illness sometimes take us by surprise

The email concerned a man (I’ll call him “Tom”), who started coughing up blood while his wife and kids were vacationing out of town for Spring Break. He went to his family physician who said he had nothing to worry about, but his symptoms continued. So after his family returned, they consulted a specialist, who diagnosed Tom with Stage 4 cancer.

Like the majority of Americans, Tom did not have any basic estate planning documents in place. So in the midst of struggling with his diagnosis and illness, Tom tried to get his affairs in order. He had a will drafted, but on the day he was going to get it signed and notarized, he went into cardiac arrest. He died two days later without having signed his Will.

The blessing of having your affairs in order

Tom’s story stands in stark contrast to an  article I read  a couple of years ago concerning Rob Jaffe, a man who was unexpectedly diagnosed with primary amyloidosis, a rare blood disease that took his life in just 46 days.

Fortunately, two years before his diagnosis and death, Rob visited an attorney to have an estate plan made. This allowed him to focus on himself and his family at the end of his life, rather than worrying about whether his legal affairs were in order. He asked his brother to tell his story to impress on others:

how big a blessing it is to know — when their time comes — that they have everything in order, that they don’t need to stress or worry about how things they worked their whole life for are going to turn out . . . I would not want to waste a minute of my life now having to do estate planning or worrying that I live long enough to get documents filed or whatever garbage comes with it.

Tragedy and illness can happen to any of us at any time, so it is important that we be prepared. Chances are, we’ll all live long, happy lives. But in the event of an unexpected illness, having your affairs in order will allow you to focus on yourself and your family rather than worrying about living long enough to sign your Will.

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When I shared my plans to start a Web-based law practice several years ago, most attorneys I told were a bit skeptical that it would work. Very few attorneys were practicing in the virtual realm and the idea of delivering legal services online seemed foreign to them.

Times have changed. Americans use the Internet to shop, bank and communicate with friends and family. And more and more, they are turning to the Internet to seek the legal services they need. They appreciate the convenience of being able to contact an attorney on their time, rather than during traditional business hours. And they appreciate the cost savings that this type of service affords.

Despite the number of people looking for online legal solutions, most attorneys still don’t offer Web-based legal services. As a result, many people turn to document-preparation services, sometimes to their detriment, because they believe that contacting a lawyer will be cost-prohibitive. By unbundling and providing legal services online, attorneys can reach individuals who may have otherwise tried to handle their legal needs on their own or would not have had access to the legal services they require.

North Carolina attorney, Stephanie Kimbro, has written a great book to guide lawyers as they try to navigate this new reality. I got to know Stephanie three years ago as I started my own Web-based firm. Having operated her North Carolina virtual law office for several years, Stephanie was already a veteran in the art of delivering legal services online. Her guidance has been invaluable to me as I started and continue to grow my own practice.

Stephanie’s knowledge is extensive and she generously shares her wisdom and experience in “Limited Scope Legal Services: Unbundling and the Self Help Client”, which was recently published by the American Bar Association’s Law Practice Management Section. This comprehensive book discusses how unbundling and delivering legal services online increases access to justice, and provides information on:

1. The ethics of unbundling
2. Best practices for unbundling that minimize risk of ethical violations
3. Considerations on implementing alternative fee arrangements
4. How to unbundle in various practice areas
5. Using technology to unbundle legal services
6. Marketing and branding unbundled legal services

Stephanie also includes a variety of checklists, sample retainer agreements, and case studies of firms throughout the country that unbundle. You can read my interview with Stephanie in the case study section of the book.

To purchase “Limited Scope Legal Services: Unbundling and the Self Help Client,” click on the link.

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If you were to become incapacitated, who would pay your utility bills, file your taxes or otherwise manage your financial affairs? If you have not legally named someone to act on your behalf, it may be necessary for a court to appoint a guardian to handle these matters for you. Guardianship is expensive and cumbersome and can easily be avoided by having a properly drafted durable power of attorney.

What is a Durable Power of Attorney?

A durable power of attorney is a written document that allows you to appoint a person who will be authorized to manage your financial affairs in the event that you become disabled or incapacitated. By signing a durable power of attorney, you authorize another person to engage in specified business, financial and legal transactions on your behalf. It is called “durable” because it does not terminate if you become disabled or incapacitated.

Can I Limit the Power Granted to My Agent in My Durable Power of Attorney?

While is possible to expressly limit the powers you grant your agent, doing so may restrict your agent’s authority to act on your behalf and necessitate a need for a guardianship if you become incapacitated.

To avoid the necessity of a guardianship, your durable power of attorney should be broad enough to allow the agent to accomplish your goals. However, because giving an agent such broad powers can leave vulnerable to mismanagement or misappropriation of your assets, you should carefully select your agent.

What Factors Should I Consider When Selecting an Agent?

To ensure your assets are properly managed, you should consider the following factos as you make you selection:

1. Character:  It probably goes without saying that the person you choose to serve as your agent should be someone you trust implicitly to act on your behalf. That’s why many people appoint a spouse or close family member. If you have any reservations about the character or integrity of the person who are considering, you should select someone else.
2. Age: Texas requires that an agent be at least 18 years old.
3. Competence: Choosing a person who has difficulty managing his or her own money is a bad idea. If someone cannot handle his or her own financial affairs properly, chances are they won’t be able to handle yours either.
4. Organization skills: The agent you choose will need to keep meticulous records of financial dealings made on your behalf and be able to account for all the financial transactions made on the principal’s behalf. So it’s important that the person you choose be extremely organized.
5. Schedule: Consider how busy the person you’re selecting is. Is she overwhelmed by work responsibilities? Is he going through a stressful situation at home? If so, that person may not have the time to devote to managing your finances if you become incapacitated.
6. Location: Choosing someone who lives close by is ideal. Someone who lives in another state or country may have difficulties managing your finances from a distance.

The person you choose as your agent will have an enormous responsibility to manage your financial and legal affairs if you become incapacitated. So the decision should not be taken lightly.

Selecting an agent who is trustworthy, competent, organized and has the time and ability to act as your agent is essential to ensure that your affairs are handled according to your wishes.

Related posts:

1. A Durable Power of Attorney Does Not Authorize An Agent to Settle An Estate (And Other Lessons)
2. Does Medical Power of Attorney Grant Agent Unrestricted Authority to Act?
3. What is a Durable Power of Attorney?
4. What is a Medical Power of Attorney?
5. Does My Medical Power Of Attorney Need To Be Notarized?

I got a heartbreaking call from young woman recently that highlights the importance of updating ones’ insurance beneficiary designations after major life events.

She and her husband had gotten married about two years ago, and were the parents of a toddler. Her husband was healthy, a soldier who recently completed a tour of duty in Afghanistan. Tragedy struck after he got home. While out for a run, he had a heart attack and died.

Her husband had a life insurance policy that he had acquired before they were married. The death benefits would have been helpful as she pieced her life together after he died. However he had named his siblings as beneficiaries, and never updated his beneficiary designations after he got married or when their child was born.

Perhaps he thought that his wife was automatically entitled to the policy after their marriage. Or perhaps he intended to change the beneficiary designations, but procrastinated. He was young and healthy. He’d eventually get to it. He died before he could. The policy was paid out to his siblings, who refused to help their brother’s young widow.

Insurance policies pass by contract to the person you have named as the beneficiary. If you obtained an insurance policy before you were married or had children, double check your beneficiary designations to make sure they reflect your current wishes.

Otherwise, the people who benefit from the policy may not be the ones who depend on you most.

Related posts:

1. A Temporary Fix: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

Many people mistakenly believe that putting their assets into a revocable trust will shelter those assets from creditors. This is not the case.

A revocable living trust is a trust that you create during your lifetime. You fund the trust by transferring legal ownership of your property to the revocable trust. However, when you transfer ownership of your assets to the revocable trust, you don’t relinquish any control over them. You still have the power to add assets to the trust, remove assets from the trust, and even revoke or amend the trust at any time and for any reason.

Because you retain so much control, you are treated as their legal owner trust assets. Consequently, a creditor can force you to use the trust assets to satisfy a legal debt.

Related posts:

1. I Have a Revocable Trust – Why Do I Need a Will Too?
2. When Should I Use a Revocable Trust?