Who needs an estate plan?
That’s easy to answer: all adults need an estate plan. An overlooked wonder of our laws is that they allow any person to leave his or her hard-earned assets to pretty much whomever and however one wishes to do. The puzzle is that more people don’t take advantage of this fundamental right. We know the basic reason for that: thinking about our mortality isn’t a fun thing to do. But, estate planning is a relatively easy and a very wise thing to do.
There are a few documents every responsible adult will want to have.
Last Will and Testament
First, there is the last will and testament. Here we are talking about: how do I want to leave my property? If you own any property that is titled in your name, or titled with someone else like your spouse, you need to take steps to direct what will happen to that property. This could be a house, a car, a bank account, or an investment. Who is to own the property after you? Is that person capable of managing the property, or might you need to leave it to a trustee to preserve it for your intended beneficiary? Who will be guardian for minor children? – you can name guardians instead of letting a court do so. An alternative to a last will and testament is a revocable living trust, and we will cover that subject in another blog.
Durable Power of Attorney
Next, there is a durable power of attorney. This is for the usually unpredictable situation when you may be unable, temporarily or longer-term, to take care of your own business matters. Just as you name an executor you trust for your last will and testament, here you pick someone you trust to be what is called your attorney in fact. That person need not be an actual attorney, just someone you trust to handle your business needs. You do not, by signing a power of attorney, give up your right to handle your own business while you are able to do so. Instead, you are looking into the uncertain future and providing for the possible day when you will need help with business. And, by your having made a durable power of attorney, your family may avoid the costly process of a court administration of your business, called a conservatorship. By the way, the word “durable” means that your power of attorney will continue to be useful if you ever lack full mental capacity to handle business matters.
While helping our clients with their estate planning, we like to discuss with them another forward-looking document. One is the durable power of attorney for health care. You may one day find yourself, perhaps only temporarily, unable to make your own health care decisions. Your health care providers will want to be able to turn to one person in discussing your care. Here again, you will have named one person you trust to help your care providers make the decisions you yourself would have likely made.