Since you can't take it with you, you must have a plan and a process to distribute your assets upon your death. That's why you need an estate plan.
What does a proper estate plan comprise?
A Will
An Enduring Power of Attorney
A Living Will or Health Directive
A Will
A will is a legal document that you have a lawyer prepare stating your wishes for your assets after you die. It also names the person you want to carry out the terms of your Will (called the executor). A Will simplifies matters upon your death, ensuring your assets are distributed according to your wishes.
In many jurisdictions, you do not need to have a lawyer draft your Will for it to be valid. However, I still recommend that you not only have a lawyer draft your Will but one who specializes in estate law.
They will be able to see potential issues that you may overlook. If you have minor children - you may also want to name a guardian (s) to prepare your Will.
An Enduring Power of Attorney (POA)
A power of attorney is a legal document that you sign to give a person(s) the authority to manage your money and property on your behalf because you can no longer manage your assets.
Either through mental or physical incapacitation. You can grant power of attorney to an individual, and it does not have to be a lawyer. For example, it is not uncommon for adult children to act through a power of attorney for their aging parents, who can no longer act for themselves.
There are two types of POAs.
- The first type takes effect immediately
- The second type comes into force on a specified future date or the occurrence of a specified event (e.g., when the grantor becomes mentally incapable or leaves the country for an extended period).
Then there is a regular POA vs. an enduring POA.
An example of a regular power of attorney is when you give to someone to act on your behalf while you are away on holiday. However, it is only for that duration. Another example is one given to a wife while her husband is away on active duty in the military. An enduring power of attorney (EPA) stays in effect even if you become incapacitated and can no longer act for yourself.
What can and can't the POA do?
A POA can manage and make financial decisions on behalf of the grantor. However, these financial decisions must show a direct benefit to the grantor of the POA.
There have been many cases of elder abuse, and often it has been the misuse of the POA role. Besides a POA, the other important document is called a health directive or Living Will.
An Advance Directive or Living Will
This is a document that allows you to specify "end of life" care ahead of time. What kind of medical care would you want if you were too ill or hurt to express your wishes? It is a way to tell your wishes to family, friends, and healthcare professionals to avoid confusion later on.
It explains which treatments you want if you're dying or permanently unconscious. You can accept or refuse medical care.
You might want to include instructions on
The use of dialysis and breathing machines
If you wish to be resuscitated if your breathing or heartbeat stops
Tube feeding
Organ or tissue donation
Also known in some places as a durable power of attorney for health care, it names your health care proxy. Your proxy is someone you trust to make health decisions if you are unable to do so. It would be best to discuss with family members of your wishes while you are still able to do so.
Choosing a Legal Custodian or Guardian for Minor Children or a dependent adult child:
The role of the guardian will mainly be the role you have now as a parent—caring for your children, acting in their best interests, and providing for them physically, emotionally, psychologically, spiritually, and culturally.
If the child's other natural parent is alive and competent, he or she will likely be granted guardianship, no matter who you name in your Will as your desired guardian.
If you have children under the age of 18, you will want to think about whom you would like to care for them in the event there is no surviving parent. Or you may want to name someone to take care of a disabled child upon your death.
A Court can review the custody of children at any time. If a legal custodian cannot act, the Court can appoint another person to be the legal custodian. Therefore, it is essential to deal with this matter in your Will to know your wishes. They are an important consideration should the issue be challenged.
You can't take it with you
There are many complex issues involved in planning your estate, especially with blended families. And families with adult children that are unable to manage an inheritance.
A trust may be useful in some of these scenarios. A trust can also be a tax-saving strategy that some families would like to reduce the overall tax bill upon death.
Death is a difficult time for any family. Preparing your estate is one way to ensure your loved ones do not have to deal with more than the grief of loss. Communication is vital. Be clear about what your wishes are for your estate and the ramifications of carrying them out.
A comprehensive guide to starting you on this process is the "Family Law Legal Planning Kit - Legal Forms (last will, Power of Attorney, Healthcare Directive forms) & 2 laminated Legal Reference Guides."
We cannot control when we die, but we can decide on the legacy we leave behind.