Estate Planning: The Basic Documents
According to the old saying, death is one of only two certainties in life. It seems logical, then, to prepare for the inevitable by preparing certain basic documents which can apply to us all, whether we have billions of dollars or only a few.
Durable Power of AttorneyIn a Durable Power of Attorney, you authorize a specific person to act on your behalf while you are still alive. Usually, the authorized acts regard financial matters (deposit or withdraw money, enter a safe deposit box, etc.) You can give general authority to include a number of actions, or you can be very specific. An example of a Specific Durable Power of Attorney would be when you give someone authority to buy or sell real estate, or sign papers in connection with the refinance of your home. The "durable" part of the document means that you intend for someone to have authority to act even if you become disabled due to illness or injury before the time to act arises.
Advance Medical DirectiveAn Advance Medical Directive is Virginia speak for a Living Will. You authorize someone to talk to your doctor about medical treatment options in the event you are not able to do so due to illness or injury. You can also give end of life instructions ( I want to die naturally) and authorize organ donations. The authority granted under this document exists until you die,
Last Will and TestamentThe Last Will and Testament is the best known of these documents. A will is the document in which you tell the world who should inherit your property. The Last Will and Testament does not take effect until your death, so you can amend or change the document as often as you wish. You can designate your Executor (the person who will handle your estate, subject to court supervision). You can also set up a trust for heirs you deem too young to inherit your property, and nominate an individual who will hold the property until the heir reaches the age you deem appropriate. You can also nominate someone to be Guardian for your minor children. Perhaps more than any other document, a will requires advance thinking. What should happen if one of the heirs you list dies before you do? Who should then inherit? Who should serve as Executor or Trustee if the person you nominate predeceases you?
AlternativesIt is not mandatory to have any of these basic documents. If you do not have a Durable Power of Attorney, you may have to do everything yourself. Without a signed Advance Medical Directive, a hospital may look to your immediate family members for medical decisions. If you do not have a Last Will and Testament, state law will determine who inherits your entire estate, without consideration for bequests you may desire for a church, school, or charity.