Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” Life circumstances can change in a blink of an eye. It is important to put together a good estate plan to help both you and your loved ones in times of transition. An estate plan, properly in place, should do two things: protect you and your assets while you are alive and ensure that your property passes to your loved ones as you wish and for their benefit upon your death.
A Power of Attorney (POA) is a legal document that is a helpful tool in an estate plan. It enables you to grant another individual the ability to make decisions in your place and on your behalf while you are still living. There are varying types of powers of attorney, and the scope of powers is determined by the legal document that is drafted. For instance, you may elect to give your attorney-in-fact the power to handle only financial affairs on your behalf; only healthcare decisions; or both. A POA may become effective immediately or may “spring” into effect at a later date, such as at the time if you were to become incompetent to make your own decisions. A POA can give you peace of mind that someone will be able to handle your affairs and see to your proper care if ever it is needed.
A Living Will, also known as an Advanced Directive for Health Care, is another legal document that should be considered. It gives you the ability to instruct and control, to some extent, your end-of-life medical treatment and care. For instance, within the Living Will, you are able to determine whether or not you would want the artificial administration of nutrition or hydration. Further, you are able to direct whether or not you desire organ donation, and, if so, to what extent. A Living Will allows you to appoint a person to oversee your wishes and to communicate same with the attending medical professionals.
Finally, an instrument that disposes of your property following your death is important to ensure that your loved ones are provided for. Two instruments that are effective in doing this are a Will or a Living Trust. A Will is a simple document, stating how your property should pass at the time of your death. It does not affect your property until the time of death. A Living Trust is an instrument that manages your property throughout your lifetime and distributes it upon death. As changes in property occur, the Living Trust must be updated.
A qualified attorney and/or tax professional should be consulted before establishing an estate plan that best fits your needs.
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