ESTATE PLANNING: THE BENEFITS OF A WILL & A POWER OF ATTORNEY
I. Introduction
The misnomer among many women is that they do not need a Will or a Power of Attorney. In fact, a majority of women do not have a Will or a Power of Attorney. Many women are busy juggling a career and a family and have not given much thought about the benefits of a Will or a Power of Attorney. This article addresses the benefits of a Will and a Power of Attorney. For example, most women have at least one special item of personal property that they want a special relative or friend to have when they die. A Will ensures that the item goes to that special person. A Will also gives you a say in who will take care of your child(ren) if you die.
II. What is a Will and a Power of Attorney?
Generally, a Will is a writing that appoints an executor, nominates a guardian, or defines the rights of an individual(s) to inherit your property upon your death. Some Wills contain an additional component called a trust. A trust is a set of instructions to a person or trust company (called a trustee) telling the trustee how to distribute your assets upon your death. Trusts are often used to protect assets for a surviving spouse or minor child(ren), or to avoid paying estate taxes. Both Wills and trusts need to be created with extreme care, and should be drafted only by a qualified attorney.
A Power of Attorney is another estate planning document. This document allows you to appoint a specific individual to make decisions for you, if you should ever become disabled and unable to make your own decisions. There are two different Powers of Attorney - one for health care decisions and another for financial decisions. These documents are discussed at more length later in this article.
III. What happens to my child(ren) when I die?
Generally, if your spouse is also a parent of your minor child(ren), your surviving spouse will receive custody of your child(ren). However, if you are single or not married to your child's other parent, the question of who will receive custody of your child arises. Unless you nominate someone in your Will, the court may appoint a guardian for your minor child(ren). The court is not obligated to appoint your current spouse or your parents as the guardian of your child(ren). Caring for a child is a huge responsibility and may be too big of a job for your parents. In some instances, you may not want your child to be cared for by a relative or the person likely to be appointed by the court. However, it must be understood that even though you may appoint a guardian for your child(ren), the court still has the ultimate decision on this matter.
Your Will gives you the opportunity to identify who you want to care for your child(ren), should something happen to you. By appointing a guardian in a Will you will avoid potential disagreements between your friends and relatives as to who would be the best person to take care of your child(ren). Keep in mind that it is very important to talk about caring for your child(ren) with the person you appoint as guardian before you appoint them.
IV. What happens to my spouse when I die?
If you die without a Will, your property will be divided between your relatives by state law. These laws have been drafted to be fair in the average situation. The amount of property received by your surviving spouse varies from all of your property to about one-half of your property, depending upon your particular circumstances. A Will allows you to dispose of your property in almost any manner you choose, although your spouse will still have certain rights. It also allows you to give your personal property, such as jewelry, heirlooms, furniture or cash to a non-relative or charity.
You can also establish a Trust in your will to manage your property for your children or a surviving spouse. A Trust allows you to retain control over your property after your death. A Trust can be useful if you do not want your assets distributed at the time of your death. Many people like to distribute a portion of the property to their child(ren) at different times. For example, you could give your child(ren) one-third of your assets at age 21, one-third at age 25 and one-third at age 30. This allows your children to have more than one opportunity to receive the benefits of your property if you are unsure of their ability to handle money.
V. What happens to me if I should become disabled?
There may be a time in your life when you are not able to make health care and financial decisions for yourself. For instance, if you become ill or are in an accident, you may not be able to let your family or your doctor know what kind of medical treatment you want or do not want. A Durable Power of Attorney for Health Care is the document which allows you to nominate someone, an attorney-in-fact, to make health care decisions for you if you are unable to do so. This person is typically a spouse, parent, child or close friend.
If you are unable to make health care decisions for yourself and you have not appointed someone to make health care decisions on your behalf, a court will appoint someone to make health care decisions for you. This person may not be aware of your thoughts regarding such things as your preferred course of treatment, life support, or organ donation. The Durable Power of Attorney for Health Care allows you to identify what type of treatment you want, such as life support and organ donation.
VI. What happens to my property if I become disabled?
A Power of Attorney is a document which allows you to appoint an attorney-in-fact to make financial decisions on your behalf. In a Power of Attorney, you can give your attorney-in-fact instructions on how you want your money spent. Further, you can limit the scope of your attorney-in-fact's authority. For instance, you can either give to or withhold from your attorney-in-fact the right to transfer real property, make gifts, provide financial support to your family, or buy and sell stocks or bonds. You can also determine whether and/or how often your attorney-in-fact reports his or her activities.
If you become disabled and do not have a Power of Attorney, your spouse or children may have to petition the court to nominate a guardian or conservator to make financial decisions for you. This person may not share in your ideas as to how to spend your money. Further, this person will be required to provide a report to the court each and every year showing how, why and where your money was spent. The Power of Attorney prevents this from happening.
VII. Conclusion
As you can see, a Will and a Power of Attorney are very important estate planning documents. These documents allow you to identify who you want to care for your child(ren) should something happen to you. They also give you the power to state whom you want certain personal property to be given and who you want to make decisions for you, should you become disabled and unable to make those decisions yourself.
Michelle Donarski is an attorney with the law firm of Anderson & Bottrell, State Bank Center, Suite 202, 3100 13th Avenue SW, Fargo, ND 58103 (701) 235-3300.