The Last Will and Testament is the written determination for the disposition of assets at death. In some instances, the Will is nothing more than a conduit to your Living Trust, picking up assets and pouring them into the Trust at death. In a well funded trust plan, the Will is not utilized at all because the estate has been moved to the trust during life.
For those who don't have a Trust, the Will contains the dispositive provisions for the worldly goods: money, home, car, etc. Having a Will is vital because it tells the world who gets what, when, and how. If someone dies without a Will, the state determines who gets the possessions and the likelihood for litigation and bitter family disputes is much higher. It is important that you make your own decisions about where your assets go.
Wills are important because we can use them to protect children, the disabled, and even for tax purposes, all if the Will is written properly.
If one's assets pass through a Will, then the process of probate is required. Probate is the state-regulated process that requires court and judicial approval to pass the assets to the heirs. While it is generally effective and can work well, sometimes probate can be a long and arduous process. The state mandates that at least seven (7) months pass before an estate can be closed. You can expect at least twelve (12) to fourteen (14) months from the date of death to pass before the estate will be closed. It also requires filing fees and paperwork that Trusts do not.
One of the biggest issues with probate can be finding the next of kin. In order to properly probate a will, the executor must either get all the closest heirs (usually spouse and children) to sign waivers and approve the Will. If they do not sign, or if the heirs cannot be found, the process will slow down. There are times when the closest relatives are cousins, which at times can be difficult to find. The rules say even if these people are not named in the Will, they must be put on notice.
The Health Care Proxy is the document that appoints an agent to make health care decisions when a person gets to the point where they cannot take decisions for themselves. The principal appoints an agent he or she trusts to follow his or her wishes, particularly, the difficult life-ending decisions. It is important that the agent understands that person's wishes and is willing to follow them. Many people choose agents who have some connection to the medical field, although that is not necessary.
The Health Care Proxy should be specific enough to provide guidance, but should not be so limiting as to be problematic. Everyone should have a Health Care Proxy, and copies should be provided to the agent(s) and the primary-care physician so it is part of the person's medical records.
The Power of Attorney is the most powerful and yet necessary estate planning tool that exists. It is important that everyone has a Power of Attorney, but at the same time, care should be taken to name appropriate agents and shelter the document itself to prevent it from being used until it is needed.
A Power of Attorney provides the agent with access to, and control of, the principal's assets. An agent who has this power can withdraw funds, write checks, change beneficiaries and transfer real estate. Essentially, it places the agent in the principal's shoes, allowing him or her to make decisions for that person. These are all important powers should the principal become unable to act, but are sufficiently broad to require caution.
A Power of Attorney can prevent the need for obtaining a guardian over a disabled or elderly person who needs help. Therefore, it is important that one be created while someone is healthy and that it be maintained safely. The time and cost of creating a Power of Attorney when a person is healthy is far less than bringing a court proceeding to appoint a guardian at a later date.
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