As a follow up to my recent articles on the new Estate Tax legislation that has gone into effect, I thought I would take a minute to talk about a few basic estate planning documents: the will, durable power of attorney, and advance directive. These are documents that everyone should have, regardless of their age, to ensure that their family is protected in case of an unforeseen accident, illness or death.
The primary function of a will is to dispose of a person’s assets according to their wishes after they pass away. While the law provides for a default distribution scheme, this scheme does not meet everyone’s ultimate wishes. This is especially true in the case of blended families. In addition to providing for the distribution of one’s assets, there are other reasons to have a will even if the person wants his or her assets distributed according to the default scheme. First, provisions in a will can make it easier for the person’s assets to be distributed by naming a trusted person to serve as their Personal Representative, and can allow the Personal Representative to serve without posting a bond. This makes the process run more smoothly and takes out some of the hassle of administering the estate. This is especially important as family members and friends have enough emotional strain to deal with during this period. Second, the basic will gives you the opportunity to name your preferred guardian for minor children. This weighs heavily with the court in deciding who will take care of your loved ones should you pass away. Finally, the basic will gives you (and your family) peace of mind in knowing that your ultimate wishes will be carried out in accordance with your desires, regardless of future changes in the law.
Durable Power of Attorney:
A Durable Power of Attorney (DPOA) is a document that names an “Attorney in Fact” who is authorized to step into your shoes in the event you are no longer able to make your own financial decisions. The purpose of this document is to ensure that your assets can be used for you and your family should you become mentally or physically incompetent before your death. Without such a document in place, family members must petition the court to appoint a legal guardian and conservator in order to manage your assets. As you can imagine, this is often a lengthy and expensive process. The DPOA allows your Attorney in Fact to step into your shoes without the court’s intervention, making it somewhat easier to deal with unforeseen difficult situations. The DPOA expires once a person passes away, at which point the power to manage assets transfers to a Personal Representative if there is a will, or a court appointed Executor if there is no will.
An Advance Directive is a legal document that spells out the type of medical attention that you desire if you are not able to answer for yourself. In an Advance Directive, you appoint a “Health Care Representative” to communicate your wishes to your doctors regarding issues such as tube feeding, the artificial prolonging of your life, as well as other extreme medical measures when you are not responsive. The Advance Directive is an extremely important document that every person should have.
There are, of course, a large variety of more complex estate planning documents that are extremely useful for those with minor children or those with a large net worth. Should you be interested, our firm provides estate planning advice and documents on a fixed fee basis in most cases. Please feel free to contact us if you would like to set up an initial consultation to discuss what documents fit your situation. We feel that an Advance Directive is such an extremely important document, that we will provide one for you at no charge, regardless of whether you desire any additional estate planning.