The three most important documents in any estate planning matter are the Last Will and Testament, the Living Will and the Power of Attorney. Each of these documents plays a crucial role in honoring your wishes and life plans in the event of your passing.
It is never too early to start estate planning and it is critical that these three documents be updated regularly. There are a number of circumstances that could affect not only the legal standing of these documents, but may affect your express desires should they change from time to time. Some examples of life circumstances that could affect these are marriage, divorce, additional children or grandchildren, or a major change in financial status.
The Last Will and Testament is the most obvious of the three. It defines your wishes upon your death. You choose how to distribute your assets and your estate and it is up to you to decide whom to afford it to. For the majority of married couples, a spouse leaves everything to their partner. In the event their partner dies at the same time or has predeceased them, it defaults to children or grandchildren. But that is not required. It is up to you. You can give, devise and bequeath your entire estate and all assets to the local circus if that is your desire. Exempting jointly owned property of course. Jointly owned property passes to the surviving owner(s).
The Last Will and Testament however, is not a simple instrument that only states “who gets your stuff.” It is so much more than that. A few other typical considerations found in a Last Will and Testament include:
Executor/Executrix: You must assign an Executor (male) or an Executrix (female) to essentially manage your estate upon your demise. This should be someone you trust unconditionally. It is their job to see to it that your wishes in your Will are carried out. In the case of married couples, a partners spouse is the obvious and most logical choice. (Note: the subject of the Last Will and Testament is known as the Testator (masculine) or Testatrix (feminine)).
Guardianship: This is obviously an extremely important consideration if you have minor children under the age of 18. The Guardian is the person whom you wish to take care of your child should you (and your spouse, if applicable) both pass away prior to your child’s 18 th birthday.
Trust Accounts: If any portion of your estate is being given to minor children, or may be given to minor children, it is important to incorporate a trust account. Trust accounts are important to protect the financial standings of a minor child’s inheritance.
As noted above, it is extremely important that you take very careful consideration of those you will appoint in your Last Will and Testament. Further, it is not necessary to share specifically what is in your Will if you do not wish anyone to know, but it is good practice to let those who have a role in your Will know the role you have selected for them. And it is VERY important that the Executor/Executrix of your Will know where your Will is located and how to access it in the event it is needed.
A moment ago, trust accounts were mentioned. Often when people think of a trust account they think of an inheritance being held in an account for a minor child to which the Trustee relinquishes control to the minor child upon attaining the age of 18 years of age. While that may seem like a logical tactic, it is something that should be considered with social norms in mind.
Unfortunately in this day and age, getting married young and subsequently divorced is a reality faced by many young Americans. Imagine your child is given an inheritance at the age of 18 and they get married at age 20 and then divorced at age 25. 50% of that inheritance is gone just like that. A common practice with many attorneys now when drafting a Will is to suggest a staggered disbursement. For example an heir might receive one-third of their allocated share at the age of 18, another one-third share of their inheritance at age 23 and the final one-third share of their inheritance at age 28. Thus, their inheritance is under some protection from unintended loss.
The Last Will and Testament must be executed (signed) to be considered valid. The Testator signs the Will in the presence of 2 verifiable witnesses and a notary public. This all typically done at your attorney’s office.
The next ever-important document is the Living Will. The Living Will is a compilation of your health care treatment instructions in the event of end-stage medical conditions or permanent unconsciousness. Essentially it is a very simple document, but it is very important to consider your wishes should you end up in such a condition. It addresses your willingness to undergo such treatment options as “tube-feedings,” surgery, CPR, radiation treatments, etc.
Your Living Will also affords you the provision to appoint a “surrogate.” A surrogate is a person that you appoint to make medical treatment decisions for you if you should be incompetent and in a terminal condition or in a state of unconsciousness. While the Living Will addresses your decisions on most major health care treatments, it is impossible to list every potential treatment scenario. Thus, your surrogate will have the legal authority to make such decisions on your behalf. Obviously it is extremely important that you express your desires to your chosen surrogate so that they can make the decisions in your best interests.
The Living Will must list contact information for the surrogate and a substitute agent. A substitute agent (optional) is essentially a secondary surrogate should the primary be unable or unwilling to act. Like the Will, the subject of the Living Will must sign it to effectuate its legality in the presence of 2 witnesses and a notary public.
Finally, a Power of Attorney is an important document in which you appoint your “agent” to handle your property should you become legally or physically incapacitated and unable to do so. While it is easy to see how this power could be abused, a Court action can be taken to terminate the Power of Attorney in extreme circumstances of abuse.
Acting on your behalf, your “agent” can sell or otherwise dispose of your property on your behalf for YOUR benefit, NOT their own. Any funds or proceeds generated by the use of a Power of Attorney must be kept separate from the agents own funds although they are entitled to a “fair and reasonable compensation” for their actions.
Some statutes and laws affect what powers a Power of Attorney may invoke, but if you are incapacitated, you will need someone to look out for your property and your day to day affairs including financial matters such as the sale and purchase of stocks in your portfolio, decisions of accounting matters, etc. Like your Living Will, you will appoint a substitute agent in the event the primary is unable or unwilling to serve.
Unlike the Living Will and Last Will and Testament, witness signatures are not typically required, but signatures of the primary and substitute agents ARE in fact required. A notary witnessing the signatures is also affixed. The reason the first two require witnesses and the third does not is because the first two documents contain text that is considered “authored” by the subject of the document. The latter remains the same for anyone and everyone who uses it. There are no changes made to the body of a Power of Attorney. It is simply an instructional document for those they may have to utilize it on your behalf someday. Of course remember to safeguard all three documents.
While all three of these documents are extremely important in estate planning, people often wait far too long to begin planning their estates. It is never too early. Effective estate planning not only ensures your final wishes are carried out, but it also eases a burden on your loved ones.
Estate planning can be taken further than the aforementioned three documents. Some people prefer to take things to another level. It is possible to go to the funeral home you wish to hold your “service” and purchase your casket ahead of time, go to the cemetery and purchase your cemetery plot ahead of time, even purchase your headstone ahead of time. Again, all of these things help ease the burden on your loved ones. They will rest assured knowing that things are in order and will be happy knowing that everything is to your liking considering the circumstances.
Speak to an attorney and plan your estate today. It is a decision you can live assuredly with for the rest of your life.