Too often I meet people who have no idea what estate planning includes or why it is even necessary. Estate planning is more than just having a will or trust. A complete estate plan protects you and your property prior to death should you become incapacitated. Without such documents as powers of attorney and living wills, your loved ones will have to petition the court to get a guardian appointed in order to make simple decisions on your behalf. Thus, a time that is already stressful and emotional for your family will be made even more difficult. All of which could have been avoided by the execution of a Power of Attorney for Property and Health Care and Living Will. Below is a list and description of the documents that a complete Estate Plan should include:
1. Power of Attorney for Property. A power of attorney for property or financial power of attorney allows you to choose the person (your agent or attorney in fact) who will make decisions regarding your property and finances should you suffer a health crisis which leaves you unable to make decisions for yourself. Your agent is empowered to sign your name and is obligated to be your fiduciary — meaning they must act in your best financial interest at all times and in accordance with your wishes. Without a power of attorney, a guardian will have to be appointed by the Court. This process could cost your family thousands of dollars and require extensive reporting to the court. Plus, the person chosen may not be someone you would have picked.
2. Health Care Power of Attorney/ Living Will. Similar to a power of attorney for property, a health care power of attorney allows you to appoint your agent or health care surrogate who is able to make decisions regarding your medical care in the event you are unable to do so. In addition, your living will expresses your desires regarding life support, nutrition and end of life care in the event you are unable to communicate your wishes. Both ensure that should you become incapacitated a person of your choosing, usually a loved one, who is familiar with your beliefs and has your well-being as their top priority, will be in charge of any and all decisions regarding your health care. Again, should you fail to appoint a health care surrogate, a guardian will need to be appointed by the court which can be costly both financially and emotionally for all involved.
3. Will or Trust. A will or trust provides how and to whom your property will be distributed at the time of your death. If you have minor children, it will include provisions regarding who should be their guardian to care for them in your absence. With a will, your appointed agent will present the will to the Court in probate proceedings following your death in order to effectuate your wishes regarding distribution of your assets. With a trust, the trustee becomes owner of the trust property during your life and distributes your property in accordance with the terms of the trust as you have decided. Thus, there is no delay or court involvement when the property has been transferred to a trust, saving your family time, effort and expense.
Either you have your own estate plan in place which will dictate the distribution of your assets according to your wishes or the government will put an estate plan in place for your family including who will take care of your children. Thus, regardless of the size of your estate, everyone needs an estate plan. Not only is it essential at the time of your death, but also if you suffer a health crisis that leaves you unable to make decisions regarding your property or medical care. Failure to execute an estate plan can also lead to family discord about how your estate should be managed, who should be appointed as your agent or personal representative, and who should care for minor children. Protect your loved ones by taking the simple step of executing an estate plan.