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December 5th, 2012 |
This is one of the most common myths that I encounter in my travels as the Estate Planning Specialist. I often hear, “Phil, my estate plan is all set. Here is a copy of my Will.”
The problem lies in the fact that a Will has no legal authority during your life. Wills only dictate how certain assets are dispersed upon your death. They do not provide direction or legal authority to your representatives during any period of incapacity or illness. Imagine the look on a teller’s face when one of your children stops by the bank to pay your medical bills and presents your Last Will and Testament.
For a more comprehensive estate plan you need to address the management of assets during periods of incapacity or illness. A Durable Financial Power of Attorney is a good first step. This document names representatives who can act on your behalf in regards to certain decisions and financial matters. The individual(s) named in the document will have full access to your accounts, checkbooks, investments, real estate and all of your assets, so it must be someone you can fully trust.
Other documents that you might want to consider when developing an estate plan would the Medical Advance Directive and Revocable Living Trust. (Both these documents will be discussed in future blogs.)
Regardless of what documents you use, it is always wise to work a qualified estate planning attorney. They can help you understand the implications of all your decisions and ensure that your wishes are carried out.
If you have questions or concerns over your transition plan, please let us know.
Fun fact: A will or testament is a legal declaration by which a person, the testator, names one or more persons to manage his estate and provides for the transfer of his property at death.
In the strictest sense, a “will” has historically been limited to real property while “testament” applies only to dispositions of personal property (thus giving rise to the popular title of the document as “Last Will and Testament”), though this distinction is seldom observed today. A will may also create a testamentary trust that is effective only after the death of the testator.