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.
Create your Will, Power of Attorney and Living Will online at
https://www.legalwills.ca/.
For More Information Contact:
LegalWills.ca
Email:
[email protected]
Internet:
https://www.legalwills.ca/