Clearing Up Estate Document Confusion
Living Will, Living Trust, Powers
of Attorney...
By Jeffrey D. Voudrie, CFP
Oct. 14, 2005 - Few topics confuse investors more than
figuring out what estate-related documents they need. Living Wills,
Living Trusts, and Powers of Attorney are just a few of the terms that
most find hard to define, let alone understand. But being comfortable
with these terms and what each one can do for you is important, and can
make the difference between your wishes being followed or creating a
nightmare.
A Living Will is a document that is designed to convey
your end-of-life wishes regarding medical care. Many people have strong
feelings about being kept alive by machines and feeding tubes. The
Living Will allows you to express your ‘will’ concerning your
end-of-life preferences. Please note that the Living Will doesn’t give
any other person the right to make medical decisions on your behalf.
A Living Trust, on the other hand, has nothing to do
with end-of-life medical decisions. A Living Trust is a vehicle that
controls the management of your assets while you are alive and how they
are distributed after your death. Plus, the assets owned by the Living
Trust don’t have to go through probate before they are transferred to
your heirs.
So how should a Living Will and a Living Trust apply
to you? Every adult should have a Living Will, regardless of age. A
great deal of stress and potential conflict is removed from your loved
ones when you clearly state your end-of-life wishes. But not every adult
needs a Living Trust.
For those with very simple estates consisting of a
home and a few other accounts, proper account registration and
transfer-on-death provisions can solve most estate problems. But if you
have out-of-state property, are remarried, have children with special
needs, or otherwise wish to simplify the settling of your estate for
your those you leave behind, then a Living Trust is something you should
look into.
Another very confusing topic concerns Powers of
Attorney. Here is a simple way to understand how they work in general.
An attorney is someone who acts on your behalf. A Power of Attorney,
then, is just a way for you to legally name who you want to act in your
behalf. You determine when that person can act on your behalf. They can
do so immediately, only if you should become incapacitated, or both now
and during incapacity. A Power of Attorney is only in force while you
are alive.
For most estate planning purposes, you need two
important Powers of Attorney. The first is a Medical Power of Attorney.
This allows you to choose who will make your medical decisions should
you become incapacitated. Only your spouse has this authority without
such a document. But what if something happens to your spouse, or you’re
single? This document can relieve a lot of headaches in these
situations.
The second Power of Attorney you need is a Durable
Power of Attorney for Assets. Not even your spouse can make financial
decisions for you if you’re incapacitated. This important document lets
you predetermine who can manage your assets when you are no longer able
to do so yourself. Without this document, should you develop dementia or
end up in a coma, someone would have to petition the court to be
appointed your guardian. This process is expensive, extremely stressful
and completely unnecessary, if you have a Durable Power of Attorney for
Assets in place.
It’s important to remember that these Powers of
Attorney can be worded so they only become active should you become
incapacitated. While you’re competent, you regain complete control.
So every adult should at least have a Living Will, a
Medical Power of Attorney and a Durable Power of Attorney for Assets.
All you have to
do is fill out the form and sign it in front of two witnesses. In some
states you may have to have it notarized.
(Note that all of these documents are available at
http://www.PartingWishes.com,
http://www.USLegalWills.com and
http://www.LegalWills.ca).
For More Information Contact:
PartingWishes.com
Email:
support@partingwishes.com
Internet:
http://www.partingwishes.com
