For most clients, an estate plan includes a Last Will and Testament, a Power of Attorney, and a Living Will.

Your Will directs who will inherit from you when you pass away.  

It also identifies the person or people who will wrap up your affairs.  It is the Executor’s job to identify the assets; decide whether, when, and how to sell assets; pay final debts and taxes; and distribute the rest according to your wishes.  

If you have a minor child, the Will may also name the person or people whom you would like to raise your child if you are no longer living.  The Will may include a trust if a beneficiary is a minor, a recipient of needs-based benefits, or incapable of managing money for whatever reason.  That trust will appoint a person or people to manage your child’s assets until an age you determine is appropriate.

Laws have developed that dictate who will inherit from a decedent who passed away without leaving a Will.  Different rules will apply, depending upon the decedent’s family structure – whether he left any surviving parents, whether his children are those of his current or a former spouse, whether he has any nieces or nephews from a sibling who predeceased him, etc.  

These rules will often not dictate the result that one would have chosen for himself.  For example, a step-child will not automatically inherit from a decedent, even if the decedent raised that step-child and loves the step-child as his own.  

By going through the process of having a Will prepared, one can specify who will benefit from his passing.

Also, appointing an Executor in a Will will avoid family members’ having to decide (or argue about) who will act in that capacity.

Sometimes a chosen Executor is not fully capable of taking on the role, for whatever reason.  The named Executor is not forced to assume the job and may execute a Renunciation in which he nominates an alternate. 

In a Power of Attorney, you name the person or people who are authorized to act on your behalf.  These people – your “agents” – can pay your bills from your bank account, make health and medical decisions for you, liquidate stocks, transfer your real estate, or engage in any number of other transactions on your behalf.  

An agent under a POA has a significant amount of authority, but the document can be invaluable if you become hospitalized or temporarily or permanently incapacitated.  If you should end up in such a state without having executed a POA, often a guardianship proceeding must go through the Courts, which can be time-consuming and costly.

While everyone should have a Will and Power of Attorney, a Living Will is more of a personal preference.  A Living Will is your declaration of how you would like to be treated in the event that you develop an end-stage medical condition or permanent unconsciousness.  Most often, an individual expresses that he or she would prefer not to undergo life-sustaining treatment if there is no prospect of improvement or any quality of life.  Having a Living Will takes the burden off of family members who are given the final say in whether to continue that life-sustaining treatment.