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A complete estate plan encompasses more than determining who will get your money after you pass away. Estate planning also requires you to decide who will manage your business and legal affairs in the event that you become incapacitated.
A power of Attorney is a legally binding document in which you give someone else the authority to act for you. A Power of Attorney is very versatile. It can cover simple tasks such as writing or endorsing checks as well as complex transactions like selling real estate. It can also authorize just on task, like selling an heirloom, or it can give your agent the power to perform every task that you now perform today.
You can give Power of Attorney to anyone you trust. Your agent does not have to be an attorney. You might choose your child, your sibling or spouse. Whomever you choose, don't worry about your agent "taking over" or that you won't be able to make your own decisions. In actuality, giving someone Power of Attorney is in essence like giving them a second set of keys in case of emergency. The best part is that you can take the agent’s keys back at any time by revoking the Power of Attorney.
Since there are a large number of options available to you when drafting a power of attorney, it is always best to consult with a legal professional to determine the best path for your specific set of circumstances.
A common element to a family’s estate plan is determining guardianship for your children if you and your spouse are no longer able to care for them. However, because most mistakenly assume that estate planning only concerns financial arrangements families often overlook this extremely important issue when deciding whether or not to create a formal estate plan.
This is an important issue for all families with minor children because, if both parents pass away, someone must care for the kids, and you don't want it to be up to the courts to decide who. The courts will take into consideration a number of factors to determine who should care for your children. However, the court will not likely have the same list of criteria that you do. Estate planning is all about maintaining control. Control over your children’s well being is lost without a proper guardianship plan.
There so many parents in America without a proper legal document to arrange for guardianship according to their wishes, and certainly some aren’t comfortable dealing with death. However, even more challenging for some parents is the uncomfortable sit-down where the two parents must decide whether it will be his favorite sibling or yours that you ask to take care of your children.
The key is to make the choice and put it in writing. You and your spouse may already agree, but a good approach is to make a list of all the people you are considering, and then run them through the following checklist:
- Are they mentally and physically healthy? (Naming someone of your own generation is preferable to naming your parents.)
- Do they have the proper financial means? (If they already have other children, caring for your children will be an additional financial burden that they will have to bear.)
- Do they have the time? (Do both spouses work and how many children to they already care for?)
- Are they geographically desirable? (After your children have been through the trauma of losing parents, uprooting them should be avoided if possible)
- Do they share your religious and social views? (Again, try to minimize the trauma associated with change that your children will experience after your passing.)
Once you have gone through this list, you will likely have at least one good option, and you are ready to put it in writing. The hard work is deciding who, the easy part, yet the one most frequently procrastinated, is actually creating the right legal document.