When most people think about estate planning, they only think about transferring wealth from one generation to the next. But a comprehensive estate plan has three primary purposes.
The first is to establish a plan to maintain control over your affairs so long as you are able. Second, an estate plan should determine who would make decisions on your behalf if you are no longer able. Finally, your estate plan should set out who should receive your assets after you’re gone.
At a minimum, every estate plan should contain three fundamental documents.
Last Will and Testament
The first piece of any basic estate plan is a last will and testament. This document names your executor and provides how your property is to be divided at your death. If you have any minor children, you may also name legal guardians for them in the event that both of their parents should die before the children reach adulthood.
Power of Attorney
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 to your agent may be very broad, or it may be very limited. 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 if you are unable to communicate your wishes yourself. In addition, it may also give someone else (called your “Proxy”) the power to authorize or refuse medical treatment on your behalf. 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 contrary to what is included in the document. You might also execute a “Living Will,” which states whether you want life-sustaining treatment if your doctor and another doctor agree that you are dying. Life-sustaining treatment means treatment that would not cure you but would only delay the dying process.
Besides the Big Three discussed above, estate planning may include several strategies and documents, like living trusts, life insurance trusts, elder care agreements, etc.
We are dedicated to helping people in Tuscaloosa, Montgomery, and the surrounding areas primarily with Estate Planning, Elder Law, Probate, and Civil Litigation matters.