How many of you have named your children as the beneficiary of your workplace life insurance policies? Of separate insurance policies? How many of you even gave it one second of thought before filling out the paperwork?

Recently, we found ourselves administered the estate of a woman who died leaving two children behind. Prior to her death, she advised us that she had a life insurance policy so we changed the beneficiary from her children to the trusts in her Will for her children. After she died, a second policy was discovered which named children as the beneficiaries. Because one of the children was a minor, the second policy passed into a Guardianship Account for her daughter instead of outright. The difference in how the proceeds from these two policies are handled couldn’t be more different than night and day!

The policy proceeds from the first policy were added to the Testamentary Descendant’s Trust. The Trustee, the Decedent’s brother, uses his discretion in making distributions for the benefit of the Decedent’s daughter. If she needs clothes, camp, ballet lessons, etc., the Trustee can pay for them with no problem.

The policy proceeds from the second policy are subject to complete judicial oversight. Following the proceeding to have the Decedent’s brother appointed as Guardian of her minor child, the Court is now a partner with the Guardian with regard to the funds down to the minute detail of deciding what bank the Guardian must use. The Court Clerk must endorse the insurance proceeds check before the Guardian can deposit it. This means that the Guardian needs to take time off of work to go to Court to meet with the Clerk. The Guardian then has to file a petition requesting permission to use an investment firm and must file an affidavit which includes details of where the Guardian plans to invest, the types of investments and many other details. Anytime the Guardian wants to make a distribution on behalf of the Decedent’s daughter, the Guardian must first petition the Court for permission. There is no guarantee that the Court will approve the request. And while they are waiting for an answer, the child’s needs cannot be met. This process will continue until the Decedent’s daughter is 18. Had the Decedent thought to disclose this policy before her death, then the beneficiary could have been changed to the Trust to avoid this situation.

As you can see, taking the time to review your assets and review beneficiary designations can make a world of difference when it comes to caring for your children when you cannot.

In addition to Wills and Trusts which cover scenarios when they pass away, clients should also focus on documents needed while they are alive. Health care documents are vital documents which cover making medical decisions. New York has a Health Care Proxy statute (Article 29-C of the New York Public Health Law (“PHL”)) which allows a client to designate someone as health care agent to act for him or her in connection with specified medical treatment and the decisions described, if the client is unable to act. The attending physician must make a determination that the “principal lacks capacity to make health care decisions.” PHL §2981(4). Such decision must be made in writing “to a reasonable degree of medical certainty” and when the decision must be made to withdraw or withhold life sustaining treatment, the physician must first consult with a second doctor. PHL §2983(1)(a). In order to ensure that the agent can make medical decisions such as to which hospital an ambulance should transport the principal, the Health Care Proxy can contain language authorizing the agent to do so. Without such language, the emergency responders will not be required to honor the agent’s authority to make such designation.

The client is naming an agent to make substituted health care decisions. These issues can cover medications, treatments, therapy, choosing doctors and any other issue connected with the client’s medical care. The Proxy must be signed and dated by the principal in the presence of at least two witnesses who are not named in the form and they shall state “that the principal appeared to execute the proxy willingly and free from duress.” (PHL §2981(2)(a)). No notarization is required. Good practice is for the client to also designate an alternate health care agent to act if the primary health care agent is unable to serve. PHL §2981(6)(a).

The statute also provides that one cannot name more than one agent at a time. One can imagine the scenario where two or more agents were named and they give conflicting advice to the doctor. The client can add precatory language that the principal desires that the agent consult with other named individuals before making decisions. We do not recommend requiring that the agent consult with others because such a requirement may prove impractical to honor and providing proof that the agent did in fact consult with these other named individuals may also prove to be difficult.

The requirements for the form and a sample form can be found at PHL §2981(5). New York does not require that the principal use this statutory form but New York does provide that the Health Care Proxy cannot be part of the Power of Attorney. PHL §2981(5)(e). Out of state forms are also valid in New York so long as the form was validly executed in the other jurisdiction. PHL §2990. The benefit to using the New York statutory form is that doctors and hospitals will be more familiar with the form and therefore, may be quicker to honor it.

The Family Health Care Decisions Act (FHCDA) can be found at PHL Article 29-CC and was added to the PHL effective June 1, 2010 to provide decision making ability when the client has no Health Care Proxy. This provision allows family members or friends to make health care decisions for an incapacitated person without a Health Care Proxy when such person is in a hospital or residential health care facility. FHCDA at PHL §2994-d(1) provides the order for people to act which may not conform to what a client would have chosen if the client had prepared a Health Care Proxy. Having a Health Care Proxy is preferred, but there is some relief to knowing that even if the person does not have this crucial document, medical decisions can be made.