A will is a document signed by you whereby you direct to whom and the manner in which your assets are to be transferred upon your death. It can be as simple or as complicated as your specific needs require. If you die without a will, your property will be dealt with in a manner prescribed by law without regard to what you might have wanted.
Some unfamiliar but important terms to know:
The Executor (also known as the Estate Trustee)
The Executor is the person or persons you appoint in your will to control the flow of money into and out of your Estate and in some cases, to administer the assets of your Estate over a period of time. The powers of the Executor are set out in your will and may be restricted by the terms of your will.
Most people who are married appoint their spouses. However, your will should provide for an alternate executor, generally children or a trusted relative who would be the Executor in the event of the death or incapacity of the surviving spouse.
The Guardian is the person appointed specifically to care for orphaned children under 18. Generally, the Guardian is someone you are very close to such as a brother/sister or parent. Once someone agrees to act as Guardian, he/she has the responsibility to care for the children as you would.
Generally, your Estate, through the Executor, is responsible for the cost of the children’s upbringing. The appointment of the Guardian under the will must be ultimately approved by the Court.
The Beneficiaries are those individuals who are to receive the assets of your estate upon your death. Generally, the sole Beneficiary of your Estate is your spouse. If your spouse predeceases you, the beneficiaries are generally your children, in equal shares, subject to the proviso, that should one of your children predecease you, the share of such child shall flow to that child’s children (your grandchildren). Your will must specifically provide for this, otherwise the share of your deceased child will flow though his estate which usually means to your deceased child’s spouse (your daughter-in-law or son-in-law). This result is clearly contrary to the desired intentions of most people. Therefore, the lawyer’s skill and knowledge is most important to ensure that your intentions are properly reflected in your will.
A will is not an irrevocable document and may be changed or revoked by you at any time and as often as you want.
Power of Attorney
A Power of Attorney is a document whereby you appoint another person or persons to act on your behalf during your life.
The Importance of a Power of Attorney
Powers of Attorney are increasingly popular in an era when the population is generally getting older. As one grows older, one not only has a greater awareness of his mortality (hence, the importance of a properly drafted will) but also a heightened concern that he may suffer some illness, which may result in a physical or mental incapacity.
Regrettably death is an absolute certainty. Hence, the necessity of a will. A Power of Attorney may be compared to cheap insurance. While death is a certainty, a mental or physical incapacity is not. However, if such incapacity should arise, a Power of Attorney is a cheap simple and effective way to deal with the management of your property and your personal care.
Remember, your power of attorney must be signed by you when you still have the mental capacity to understand the effect of what you are signing.
What Could Happen if You Don’t Have a Power of Attorney
If you suffer a mental or physical capacity and you are unable to manage your property nor handle your own personal care, you risk having the Government step in to handle your affairs or your spouse or children may have to seek a Court Order to have one of them appointed as the person responsible for managing your affairs thereby incurring significant legal costs, not to mention the emotional energy expended.
There are two main types of Powers of Attorney:
Continuing Power of Attorney for Property which grants your appointed attorney the power to manage your assets, and
Power of Attorney for Personal Care which grants your appointed attorney the power to make decisions on your behalf regarding your personal care, such as hiring nurses, determining the need for and selecting a rest home or nursing home and consent to treatment or surgery if needed. Under such a power of attorney, the attorney may opt to take or withdraw heroic measures to sustain one’s life.
Restrictions and Conditions
Your Power of Attorney may be restricted by conditions that you place on your attorney. For example, a widely used restriction provides that the Power of Attorney shall not take effect until you are found to be incapable of managing your affairs by a qualified physician.