The idea that you can create a simple estate plan by choosing to create a single document, such as a power of attorney or a will, is something that too many people believe. Do-it-yourself planning sites and books sometimes appeals to people who don’t like the idea of spending money on hiring an attorney to help them create an estate plan. Because of this, people interested in do-it-yourself planning sometimes believe that creating a single tool will be enough.
Unfortunately, this is not the case. Relying on what you read in a book or what you find online can be very damaging if you use that information without the guidance of an estate planning lawyer. Estate plans can be very complicated, and a single tool is never enough to accomplish all of your goals. A good plan is like a clock. Each piece serves a specific function, and without all of the pieces together, your plan will not work like it should.
Having Only a Will
A last will and testament is what most people think of when they think of estate planning. Most people understand that your will can allow you to make inheritance choices and select your heirs. What you might not know is that through your last will and testament you will also nominate an executor, also called a personal representative. This person will have the responsibility to manage your estate through the probate process. This means that the person you choose as executor will have the responsibility to manage your property after you die and make sure your heirs receive it in the manner you wish.
If you only have a last will and testament, however, you won’t be able to select someone who will act on your behalf while you are alive. For example, if you should become ill you will need someone who will make medical decisions for you, as well as someone who will manage your finances. You can’t do this with awill. To name someone who will represent your interests while you are alive, you need another tool.
For persons who own real estate or have more than the most modest of estates, a will is often not the most cost and time efficient way to pass on their assets. A better choice for many is a revocable living trust.
Having Only a Power of Attorney
Powers of attorney are flexible, powerful documents that allow you to appoint an agent who can represent your interests. Your powers of attorney can be as limited or as broad as you choose, giving you the option to delegate your authority as much or as little as you like. You can appoint an agent who will receive decision-making authority immediately, or create powers of attorney that only apply if you become incapacitated.
Yet regardless of the type of power of attorney you create, these powers don’t continue to exist after you die. An agent cannot represent your estate unless you appoint that same person as your executor, which you can only do in your will.
As with planning for death, planning for incapacity for may folks should also include a living trust.
The best way to get the best advice about your planning options is to consult with an experienced and qualified estate planning attorney.