It remains vital to ensure that your family has a proper estate plan, including, at a minimum, three key documents.
1. Will
Simply stated, a will is a legal document that designates who you desire to receive your property at your death and who you desire to administer your estate and ensure your wishes are honored. If you die without a valid will, the laws of the state where you reside at death control who inherits your property. These laws are known as intestacy statutes and they are based on blood and spousal relations. Who inherits under these statutes may not be consistent with your intentions or desires. By way of example, in Alabama, your spouse may not receive everything if you die without a Will. Furthermore, without a valid will, state law controls who has priority to serve as the personal representative of your estate to administer your estate and as guardian over your minor children. The individual with priority to serve as personal representative of your estate or guardian over your minor children may not be the person you desire to serve in that role.
The good news is that by executing a valid will, you can opt out of the default state statutes and make your own plan. A will allows you to select the beneficiaries of your estate, which may include family members, friends, and charities. With a will, you choose the personal representative of your estate and the guardian of your minor children. Among other benefits, a will can be designed to save probate expenses at your death, including waiving the requirement that your personal representative post a probate bond or filing an inventory or accounting.
2. Financial Powers of Attorney
A financial power of attorney is a legal document that appoints an individual as your agent to act on your behalf to manage your assets and finances. The durable power of attorneys are designed to permit your designated agent to manage your assets for your benefit during a period in which you are incapacitated. If you become incapacitated and have not appointed someone to manage your assets, a court proceeding will be required to appoint someone on your behalf to gain access to your assets and use them for your benefit. The individual appointed on your behalf through a Court proceeding is based on state statute and the individual with priority under state statute may not be consistent with your intentions or desires. The execution of a durable financial power of attorney will ensure that you choose the individual to manage your assets during any period of your incapacity and will, among other benefits, save the time and expense associated with a court proceeding.
3. Advance Directives (known as “Living Wills”) and Medical Power of Attorney
An advance directive is a legal document with two components. First, an advance directive provides you an opportunity to express your wishes with respect to certain end-of-life treatments, including life sustaining treatment and artificial hydration and nutrition. Second, an advance directive permits you to appoint an individual as your health-care proxy to make medical decisions for you in the event you are unable to make those decisions. A medical power of attorney complements an advance directive’s appointment of a health-care proxy by providing your nominated proxy with additional health-care related powers for your benefit. If you become incapacitated and have not appointed a proxy to make medical decisions on your behalf, a court proceeding will be required to appoint someone to make medical decision on your behalf. The individual appointed on your behalf through a Court proceeding is based on state statute and the individual with priority under state statute may not be consistent with your intentions or desires. The execution of an advance directive and durable medical power of attorney will ensure that you choose the individual to make medical decisions on your behalf and will, among other benefits, save the time and expense associated with a court proceeding.
To be valid, each key estate planning documents requires certain state specific elements and must be executed with the formalities and requirements of state specific law. To ensure that a proper estate plan is in place, it is important to seek the assistance of an estate planning professional. An estate plan that fails to meet certain state specific requirements is a void estate plan and will result in default state statutes applying to an individual’s situation.
For those families who have already taken the initiative to execute key estate planning documents, life changes, including the crisis we are currently experiencing, always necessitate families to review those documents to ensure that they are consistent with the families’ current wishes and needs.
