Getting Started - Taking the Leap
The four Main Choices of Estate Planning
The four initial choices when writing a will and attendant documents are:
- Choosing the personal representative,
- Choosing the attorney-in-fact for your durable power of attorney,
- Choosing the attorney-in-fact for your durable power of attorney for health, and
- Choosing what property to give to whom.
FIRST, the place to start is with the personal representative. Your personal representative is the person who will distribute your property after your death in accordance with the directions you give in your will. Other equally important things that a personal representative does include paying your debts existing at the time of your death, paying the expenses of your last accident or illness, and paying the costs for your funeral. The personal representative uses funds from the assets and money you leave behind, known as your estate, to pay those bills. Also, a personal representative is responsible for filing the income tax return for the last year you were alive, and for filing federal and state estate tax returns.
SECOND, the next step is to choose your attorney-in-fact for your durable power of attorney. An attorney-in-fact is a person who can act for you and is sometimes called an agent. A power of attorney is the document wherein you write out who is your attorney-in-fact and what it is they can do. A durable power of attorney allows someone to act for you when you cannot. For example, if you were injured in an accident and could not write checks or otherwise pay bills, the person who you appointed as your attorney-in-fact in your durable power of attorney could get access to your bank account and otherwise handle your financial affairs. Once you were recovered sufficiently to handle your own financial affairs, you would take back those duties from your attorney-in-fact. In sum, it is a legal document that allows another to act for you when you cannot act.
THIRD, is to choose your attorney- in-fact for your durable power of attorney for health care decisions. If you could not make and communicate decisions about your health care, the person who you named as your attorney-in-fact in your durable power of attorney for health would make those decisions. The importance of this document is that you get to choose who speaks for you for your health care when you are unable to do so.
FOURTH, is to decide to whom you want to give what property. When deciding who gets what property, it is helpful to know that not everything can be passed by your will. For example, if you have a life insurance policy, who you name as the beneficiary on the policy takes precedence over anything you may say about the policy in your will. If you have named a beneficiary or beneficiaries on your investment accounts or retirement accounts, that naming of beneficiaries trumps anything you may say about those accounts in your will. So when deciding to whom you want to give your property, it is wise to take into account what property can pass through your will and what property can pass outside your will.