What Seniors Must Know About Powers of Attorney and Wills
Preparing Your Family for the Future
No one wants to ponder what happens after they die, but it's important to take the time to sort out what will happen to your property and assets after you're gone. Learn how to give instructions to your family about medical and legal matters if you become sick or lose the ability to decide for yourself. Simple planning now can remove and issues down the road.
- Estate Planning
- Writing a Will
- Testamentary Trusts
- Power of Attorney
- Legal and Financial Planning
Estate planning involves writing your will, as well as drawing up any direction for how you'd like your assets to be handled after you pass. It includes the process of creating the documents that lay out how you'll be cared for if you're incapable of making decisions on your own - how your medical decisions and financial matters will be decided.
In order to draw up the legal agreements that make up an estate plan, you must be 18 or older and in a sound state of mind. Key documentation includes the following:
- Retirement Paperwork
- Testament documentation
- Power of Attorney
- Power of Guardianship
If you have a binding beneficiary in your retirement or insurance policy documentation, this could override the beneficiary in your will. If you have trust documentation, the assets may be distributed based on this, no matter what you've written in your will.
If you have an estate plan, it makes sense to have an attorney evaluate it to determine which documents supersede the others. Proper estate planning can help limit the taxes your heirs must pay, helping avoid conflict within the family after you've passed.
Writing a Will
A will goes into effect after you die. It handles things like who will look after your children if you die when they are still young, how your assets will be distributed, any trusts you'd like established, and how much money you'd like to be donated to charities. You can also include detailed instructions about how you'd like your funeral to be arranged.
You can have your will written and updated by an attorney. In some cases, they will not charge to prepare the documentation if you nominate them to be the executor of the will.
Quick Stat: An estimated 60% of Americans will die without a will. Don't make the mistake of letting this happen to you.
It's possible to purchase a kit online, but it makes sense to work with an attorney as you design your will, to be sure that everything is done correctly. If your will isn't witnessed and signed, it won't be legally bonding.
It's also important to keep your will up to date and valid as your rights change - if you get married or divorced, if you have more children or grandchildren, if your spouse dies, or if you have a major change in financial assets.
If you die without a will, or with a will that is not legally binding, the court will appoint an administrator to pay your bills and assets, then pass down the remainder based on a legal formula. This may not be how you want your money to be distributed, so if you have another plan, it's important to have a legally binding will.
Testaments and Trusts
A trust is set up in your will to take effect after you die. They are usually designed to help you protect assets.
There are reasons that you'd want to create a trust:
- Your beneficiaries are minor children.
- Your beneficiaries are not of sound mind.
- You are afraid that your beneficiaries will not handle the money wisely.
- You don't want your family's assets involved in the settlement from a divorce.
- You don't want your family assets to be affected by a bankruptcy.
- Your trust will be administered by a trustee, usually designated in the will.
The trustee must look after the assets for the beneficiaries until the trust expires.
Power of Attorney
Appointing a person as a power of attorney allows them the legal authority to handle your affairs. They can handle financial powers, your health, or guardianship.
The different types of power of attorney include:
A general power of attorney is when you appoint an individual to make decisions for you, usually legal and financial decisions, for a specific period of time. The power of attorney is invalidated if you're unable to make decisions on your own.
Enduring power of attorney allows you to appoint someone to make legal and financial decisions for you if you're unable to make your own choices.
A medical power of attorney is only able to make medical decisions for you if you are not able to do so on your own.
You may also want to draw up other documents to help your family and any other legal appointees as you age, including:
An enduring power of guardianship - this gives a person the ability to make choices about where you live, your medical care, and your lifestyle, if you can't make them on your own.
Advance directive: Record your desires about future medical treatment, in the event you can't express them for yourself.
Advance healthcare directive: This explains how you'd like your body itself to be handled if you can't make decisions on your own.
You'll need to draw up documents that are based on your individual situation and the responsibilities that you can delegate to others. Seek out legal advice if necessary.
Selecting a Power of Attorney
Choose people that you know are financially responsible, trustworthy, and who will be available when needed.
Legal and Financial Planning
If you keep your paperwork well organized, it will help your family and your executor. List out the legal documents you have and where you keep them.
Here's a list of important documents to store:
- Birth Certificate
- Marriage Certificate
- Power of Attorney Documents
- Living Will
- Any Advance Directives
- Insurance Policies
- Property Deeds
- Bank Account Information
- Retirement Policy Information
- Documents for Investments
- Insurance Cards
- Medicare Card
- Funeral Arrangements
Having an estate plan can help make sure that your wishes are carried out after you pass, or if you are medically disabled and cannot make your own choices.