Will vs. Durable Power of Attorney
At some point in our lives, we must consider what we want to happen to our estate once we die. We must also consider what will happen if we become mentally or physically incapacitated prior to our death. Most of us go through life believing that we have plenty of time to take care of estate planning. We think, “I am too young to worry about making a will or a durable power of attorney.” Some people assume that they do not have sufficient assets to warrant the time and expense of drafting a will or other estate planning documents.
Unfortunately, a large majority of people do not have the time they believe they have to take care of their final preparations. It only takes one tragic second to end a life or change a life forever. Therefore, you should take steps now to protect your loved ones and yourself by drafting the two most important estate documents: a will and a durable power of attorney.
Why Do I Need a Will?
➢ What is a Will?
A will, also known as a Last Will and Testament, is a legal document that directs how you want your assets to be distributed upon your death. A will can be simple or it can be as complex as it needs to be to ensure your final wishes are carried out. Your will is designed to meet your specific needs and desires depending on your financial situation and your personal circumstances. You can even provide for the care of your pets in your will or leave certain assets to specific charities if that is important to you.
A basic will should include, at the very least, the following elements:
- The names of your heirs;
- How your property is to be distributed among your heirs;
- The name of a guardian for any minor children;
- The name of the person who will manage the assets inherited by heirs who are minors at the time of your death;
- How your debts and taxes are to be paid; and,
- The name of the personal representative or executor who will administer your estate.
➢ What if I die without a will?
Every state has what it refers to as intestate laws that govern a person’s estate when that person dies without a will. Intestate laws dictate who will receive your assets and in what percentage. For example, your spouse may not receive 100% of your assets if you die without a will. Intestate laws may require that your spouse split all of your assets equally with your children, even if the children are minors at the time of your death. This can create a difficult legal situation for your spouse.
Intestate laws vary by state with some laws being more complicated and time-consuming than others. Regardless of your state’s intestate laws, dying without a will causes unnecessary stress and expense for your heirs. The state dictates each step of the probate process and your assets could be tied up in court for a long time thus depriving your heirs of much needed support after your death.
➢ What do I do with my will after it is signed?
A will does not become effective until your death. Most states do not require wills to be filed until after the person’s death; therefore, your original will should be kept in a safe place. Your personal representative or executor should have a copy of your will; however, he or she must also know the location of the original will and be able to retrieve the original upon your death. If you decide to make changes to your will, make sure that you destroy all copies of the previous will, including any copies you provided to your executor, personal representative, and family members.
Why Do I Need a Durable Power of Attorney?
There is a very good reason why you need a durable power of attorney even though you have a will. A will does not become effective until you die. However, what if you become mentally or physically incapacitated prior to your death and you are unable to manage your finances? A durable power of attorney allows someone to act on your behalf to make financial decisions for you during your lifetime.
A general power of attorney ceases to be valid if you become incapacitated; however, a durable power of attorney contains a clause that makes the power of attorney valid even in the event you become incapacitated for any reason. Your attorney-in-fact can do everything in your name that you could do legally if you were not incapacitated. This includes:
- Buying and selling real estate
- Opening and closing financial accounts
- Liquidating assets
- Entering and ending contracts
- Filing lawsuits
- Managing investments
Your durable power of attorney becomes void at the time of your death. Your will then becomes the controlling document with regard to your assets and finances.
➢ Can I change or revoke my durable power of attorney?
Yes, you can revoke your durable power of attorney at any time. You can also change your durable power of attorney to appoint a new attorney-in-fact at any time. Most states have laws that specify how you must give notice to parties in interest that you have terminated or changed a power of attorney. You should check with a local attorney to ensure that you take the proper steps if you wish to revoke or change your durable power of attorney.
Having both a will and a durable power of attorney is a wise estate planning strategy that protects your assets and your loved ones.