When most people think about Estate Planning, they think about a last will and testament. And while having a will is an important piece of the estate planning puzzle, it’s just that, a piece of the puzzle.
The primary purpose of a last will and testament is to set out who you want to receive what after your die. It may be a relatively short and simple document, or it may be longer and more comprehensive, depending upon the circumstances.
A power of attorney is a document in which you (the “principal”) appoint someone else (your “agent”) to act on your behalf. The power granted may be very broad, or it may be very narrow. For example, if you have ever traded in a vehicle, chances are that you signed a narrowly drafted power of attorney appointing the dealer as your agent to transfer the title to that vehicle. On the other hand, when one spouse grants power of attorney to the other, the document is usually drafted to give the spouse/agent the authority to do virtually anything the principal could do himself.
The third document that should be a part of every estate plan is an advance directive. This document sets out the kind of health care treatment you would or would not want to receive in the event that you are unable to communicate your wishes yourself. In addition, it may also give someone else (called your “Proxy”) the power to authorize medical treatment, or even to refuse it. Depending upon how it is drafted, it may grant the proxy broad power to make decisions, or it may provide detailed instructions instead that do not grant the discretion to authorize anything that is contrary to what is included in the document.
Besides the Big Three discussed above, estate planning may include a number of strategies and other documents, like living trusts, life insurance trusts, elder care agreements, etc.
In our experience, most people are unaware of what their options really are when it comes to estate planning. Even worse, many people don’t realize that a few innocent choices can have the result of ruining what they thought was their estate plan. As a result, we hold monthly educational workshops designed to educate people on the most popular estate planning questions facing people in Alabama today.
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