Estate Planning: What do I need and Why?
Aug 12, 2014
No one likes to talk about death, but it is inevitable that you will one day die. Planning ahead helps your loved ones go through this grieving process without the headaches of being unprepared. So what documents are required to take the burden off of your love ones?
A will is a legal document that states who inherits your estate and who is in charge of handling the distribution of the assets. Also, if you have minor children at the time of your death, it will state the person you wish to be their legal guardian. Many times, people will use their will to state their final wishes, such as funeral, burial and cremation.
Wills can be vague or specific when it comes to instructions on how to handle the estate. For instance, you can specify at what age and for what reasons a person receives inheritance from your estate or you can simple state who receives what amount at the time of your death.
What if I don’t have a will?
If you do not have a will, or your will did not meet the requirements of the state of Wisconsin, your family will have to go through the intestate system. The intestate system requires your loved ones to take your estate in front of a judge and ask the judge to determine who inherits your property, how much they each receive and who is in charge of your estate. Depending on the details, your family may even have to do the formal probate system for your estate, which requires all decisions to be made by the judge. This can be time consuming, costly and often cause conflict between family members.
Durable Financial Power of Attorney
A Durable Financial Power of Attorney is a document that states who will be in charge of your finances if you are unable to. The Durable Financial Power of Attorney goes into effect if something happens causing you to have loss of mental capacity. Some examples of what can cause loss of mental capacity are auto accidents and dementia. If you become incapacitated, your power of attorney will have the authority to act for you with respect to your financial affairs, including: real estate, tangible personal property, stocks and bonds, bank accounts, the operation of your business, insurance and annuities, legal matters, government benefits, and taxes.
What if I don’t have a Durable Financial Power of Attorney?
In the event that you become incapacitated and do not have a Durable Financial Power of Attorney, no one is able to handle your financial affairs. That means any action necessary to maintain your real estate, financial accounts or business cannot be done. In order to have someone appointed to handle your finances, your family would have to petition the court for a guardianship. A guardianship requires a mental evaluation, a Guardian Ad Litem, and an extensive court proceeding where an attorney is more than likely required. Also, the person that is requesting to be your guardian has to go through an evaluation by the court to determine if the court believes they are an acceptable guardian. This process can be expensive and time consuming and may end up with a professional guardian that knows nothing about you or your family. This all can be avoided with a simple Durable Financial Power of Attorney.
Healthcare Power of Attorney
A Healthcare Power of Attorney is a person you designate to make your healthcare decisions if you are unable to due to incapacitation. Your healthcare power of attorney can make decisions as simple as whether you receive medication or as complex as whether you receive a high risk surgery. Your healthcare power of attorney is given access to your medical records and the authority to speak with your doctors to make an educated decision.
What if I do not have a Healthcare Power of Attorney?
A medical provider is only able to perform lifesaving medical procedures without your permission. Once you are stabilized, they are no longer able to take any other action besides keeping you stable. If you are incapacitated and do not have a Healthcare Power of Attorney, your family will have to go through the same guardianship process as required if you do not have a Durable Financial Power of Attorney. While waiting for a guardian to be appointed, no major decisions can be made while you remain incapacitated.
Declaration to Physicians
A Declaration to Physicians, sometimes called a living will, is a written statement of your desires if you are in a vegetative state or on life support. The Declaration to Physicians will also state how long you wish to be kept in the vegetative state before life support is terminated.
What if I do not have a Declaration to Physicians?
If you do not have a Declaration to Physicians, your family and doctors have to guess what your desires would have been if you ended up in a vegetative state. Many times family members are emotional and disagree with what your desires are, causing stress and anxiety. If families cannot agree and wish to dispute the matter, a court proceeding will have to take place. This process can take months or even years, as you lie in a coma, as it did in the Terri Schiavo case.
A trust is an advanced estate planning tool that is used by many to avoid the courts probate process. Having a Will allows an estate to go through a simple probate process with the courts, but any process with the courts can be time consuming and complicated. A trust allows a person to have all of their assets handled outside the court system for a quick and efficient estate handling. People use trust if they have a mixed family, they own a small business, they do not want their estate publicized, they have a special needs beneficiary, own real estate in two states, or wish to avoid death taxes. To find out more about trusts look at our blog called “What is a Revocable Trust and Do I Need One?”
Even though we have described the basic forms used in estate planning, all family situations are different and it is best to consult with an attorney to find out what estate planning tools will best benefit your family. Here at Pedersen Law Office we have free consultations in all our areas of practice, including estate planning. We can meet with you in either our Appleton area or our Green Bay office. Take advantage of our free overview of your financial situation to see what option is right for you!