Estate Planning 101

It’s been a while since I just dove into the basics of estate planning, so let’s do it real quick.

To begin, estate planning covers you in two scenarios:

Scenario #1 – you are alive but incapacitated (think you are in a car accident or you have dementia).

Scenario #2 – you have died (that’s right – no sugar coating here 🙂 – it’s okay to talk about death – it won’t kill you).

In scenario number one the focus is on protecting you.

In scenario number two the focus is on protecting your family, your legacy, and your assets.

    Scenario #1 Documents

1. Power of attorney

Your Power of Attorney designates the person that is in charge of handling your life if you are unable to do so. Paying the bills and making other financial decisions is within the scope of the Power of Attorney.

Remember, though, that this person, when they are acting in this capacity, has a fiduciary duty to you. Nevertheless, make sure you appoint someone to this position that you trust.

And, if you don’t have a power of attorney and need one, your family will have to go through the courts. It’s expensive. It’s time consuming. And you don’t get to pick the person.

Usually you’d name your spouse here if married and a backup.

If you are not married this is CRITICALLY important, as without a power of attorney it’s likely no one would have access to your financial accounts to take care of you.

2. Medical Power of Attorney.

This is essentially the same as the Power of Attorney but specifically related to medical decisions.

Note: if you have a child over 18 you may want to have them give you one of these. If they are injured their right to privacy trumps your right to know what’s going on.

3. Minor Power of Attorney and Minor Medical Power of Attorney

These two documents name the person in charge of your minor children if something happens to you and you are incapacitated.

Think of it as temporary guardianship appointments.

4. Health Care Directive.

This document tells your Medical Power of Attorney if you want to pull the plug if you are a vegetable and life support is keeping you alive.

    Scenario #2 Documents

1. Disposition Instructions

These are essentially burial instructions. Who is in charge and what do you want to have done with your remains are taken care of with this document.

2. Will

Your will does three things:

First, it names your Personal Representative (also called Executor). They are in charge of gathering your assets, determining your debts, paying your debts, and distributing your assets.

Second, if you have kids, the will names your long-term guardians. If you do not name a person here a court will decide who the guardian is.

Third, the will tells the world where you want your possessions to go.

If you are not married this is critically important, as your significant other will not receive any assets unless they are specifically provided for under the will.

BONUS: there is a bonus in the video – watch it to learn!


Christopher Small
Estate Planning Attorney

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