The simplest way to ensure that your funds, property and personal effects will be distributed after your death according to your wishes is to prepare a will. The importance of a will cannot be overstated. A will is perhaps the most important legal document a person ever signs. Yet, over 70% of American adults do not have a will. A will is a legal document designating the transfer of your property and assets after you die. Usually, wills can be written by any person over the age of 18 who is mentally capable, commonly stated as "being of sound mind and body."
Although wills are simple to create, about half of all Americans die without one (or Intestate). Without a will to indicate your wishes, the court steps in and distributes your property according to the laws of your state. Wills are not just for the rich; the amount of property you have is irrelevant. A will ensures that what assets you do have will be given to family members or other beneficiaries you designate. If you have no apparent heirs and die without a will, it's even possible the state may claim your estate.
Having a will is especially important if you have young children because it gives you the opportunity to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children who may be someone you do not even know.
In most cases, a surviving parent assumes the role of sole guardian. However, it's important to name a guardian for minor children in your will in case neither you nor your spouse is able and willing to act. The guardian you choose should be over 18 and willing to assume the responsibility. Talk to the person ahead of time about what you are asking. You can name a couple as co-guardians, but that may not be advisable. It's always possible the guardians may choose to go their separate ways at some later date, and, if so, a custody battle could ensue. If you do not name a guardian to care for your children, a judge will appoint one, and it may not be someone you would have chosen.
An Executor is the person who oversees the distribution of your assets in accordance with your will. Most people choose their spouse, partner, an adult child, a relative, or a friend to fulfill this duty.
If no Executor is named in a will, a Probate Judge will appoint one. Probate refers to the legal procedure for the orderly distribution of property in a person's estate. The Executor files the will in probate court, where a Judge decides if the will is valid. If it is found to be valid, assets are distributed according to the will. If the will is found to be invalid, assets are distributed in accordance with state laws.
Responsibilities usually undertaken by an Executor include
Paying valid creditors;
Notifying Social Security and other agencies and companies of your death;
Canceling credit cards, magazine subscriptions, etc.; and
You'll probably need to update your will several times during the course of your life. For example, a change in marital status, the birth of a child, or a move to a new state, should all prompt a review of your will. You can update your will by amending it by way of a Codicil or by drawing up a new one. Generally, people choose to issue a new will that supersedes the old document. Be sure to destroy the old will after you sign a new one.
A trust is a device for transferring property to another person (the trustee) to be held in trust for the benefit of one or more beneficiaries. A settlor or trustor is a person who creates a trust and transfers some of his/her property into it. The trustee manages the trust. In some living trusts the trustor/settlor names him/herself as both trustee and beneficiary, naming an alternate trustee to take over management of the trust if (s)he becomes incapacitated or dies; also naming alternate beneficiaries to benefit from anything left in the trust at the settlor’s death.
Revocable trust: One that can be revoked during the trustor/settlor’s lifetime; also called an inter vivos or living trust. (Living trusts become irrevocable at the death of the original settlor.)
Irrevocable trust: A trust that cannot be revoked or changed once it is set up and executed.
Testamentary trust: A trust that is set up in and by a Will.
Once your Will and or Trust is written, store them in a safe place that is accessible to others who may need to access them. We suggest that you keep your Will, Trust and other important documents in a fire proof box that you can purchase at any office supply store. Make sure a close friend or relative knows where you are storing these documents.
An Advance Medical Directive is not a part of your will. An Advanced Medical Directive is a written document that authorizes what you want in terms of your health care. This includes the providing, withholding or withdrawal of life-prolonging procedures in the event you have a terminal condition. A terminal condition may mean either that your death is imminent, or that you are in a persistent vegetative state. It becomes effective only when you cannot express your wishes yourself.
An Advance Medical Directive is different from a health care power-of-attorney in that an Advance Medical Directive does not appoint an agent.
Like completing a health care power-of-attorney, preparing an Advance Medical Directive can help ease the confusion and conflict that may arise among your loved ones if you are unable to communicate your health care wishes. It can also help assure that the power to make these important decisions is yours, and not the Commonwealth of Virginia's, as a Advance Medical Directive serves as the final expression of your legal right to refuse or to authorize medical or surgical treatment.
It is your responsibility to make sure that your health care providers know that you have made a Advance Medical Directive. Be sure your family knows as well. You should make copies of your Advance Medical Directive and give them to all the people who may need them. For example, you should consider giving copies to your doctor or other health care professionals, family members, and hospitals. Also, be sure to keep the signed original with your other important papers. Talk to your doctor to be sure he or she understands your choices and will respect your decisions. Your Advance Medical Directive should be made a part of your medical record.
A Health Care Power of Attorney is not a part of your will. A Health Care Power of Attorney is a separate document that gives your agent the power to make decisions based on your stated preferences or your best interests. It becomes effective only when you cannot express your wishes yourself.
If you choose not to make a Health Care Power of Attorney, the law specifies who your doctor should turn to for medical decisions. The following persons, in the specified order, will be asked to make your treatment decisions: a guardian (if you have one), your spouse, your adult child, your parent, your adult brother or sister, or any other relative. They must take into account any preferences you have expressed, your religious beliefs and values, and your best interests. If another person does not agree with the medical decision, he or she may ask the court where you reside to review the situation. If you wish to avoid disputes or confusion about your care and treatment, it is better to have a Health Care Power of Attorney.
It is your responsibility to make sure that your health care providers know that you have made a Health Care Power of Attorney. Be sure your family knows as well. You should make copies of your Health Care Power of Attorney and give them to all the people who may need them. For example, you should consider giving copies to your doctor or other health care professionals, family members, and hospitals. Also, be sure to keep the signed original with your other important papers. Your Health Care Power of Attorney should be made a part of your medical record.
A Financial Power of Attorney is not a part of your will. It is a separate document that authorizes someone you name to act in accordance with your financial intentions.
It becomes effective only when you cannot express your wishes yourself. With a Financial Power of Attorney, you choose who will act and define their authority and its limits, if any. You should make sure that all your financial professionals (stockbrokers, accountants, financial planners) and banks have a signed copy.
If you do not have Health Care and Financial Powers of Attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act for you. People appointed in this manner are referred to as guardians and conservators. If a court proceeding is needed, than you may not have the ability to choose the person who will act for you. With Powers of Attorney, you choose who will act and define their authority and its limits, if any.
Disability or the end of your life is something you probably don't want to dwell on, but thinking about what will happen to your loved ones and your assets and personal possessions is important. Making sure you've done all you can to make their lives easier will give you peace of mind. And once your documents are drafted, you won't have to think about it again unless something significant in your life changes.