WILLS AND TRUSTS
WILLS
No one likes to think about his or her own death. But, it would be a tragedy not to prepare a will if you have young children or hold significant assets and property that you want distributed to specific people.
If you die without a will, your estate will be divided according to your state’s intestacy statute, which may or may not coincide with what you had in mind for the distribution of your assets. It is up to you to take control.
“For example, most people assume that when a spouse dies the surviving spouse inherits everything, and that is not the case in any state,”. “In an intestate situation, the estate gets divided between the surviving spouse and children, and sometimes if there aren’t any children, it gets divided between the surviving spouse and the decedent’s parents. This is a nasty shock to a lot of surviving spouses to find out that they don’t get control of everything.”
Having a will also allows you to name a guardian who would rear your minor children if you and the other parent died. “If you don’t nominate someone in your will to be their guardian and to raise them, then a judge would have to make that decision without any input from you,” says Mary Randolph, a legal editor at Nolo.com. Needless to say, the person picked might not be the same one you would want in charge of your children.
TRUSTS
Wills and trusts are two very different types of estate planning documents.There are numerous trusts that you can create, from revocable and irrevocable trusts to living and testamentary trusts. Calvert & Calvert is your resource for learning about and inplementing the different types of basic and advanced trusts used in estate planning.
LIVING WILLS
A living will is a legal directive that a person uses to make known his or her wishes regarding life prolonging medical treatments. It can also be referred to as an advance directive or health care directive. A living will should not be confused with a living trust, which is a mechanism for holding and distributing a person’s assets to avoid probate. It is important to have a living will as it informs your health care providers and your family about your desires for medical treatment in the event you are not able to communicate on your own behalf.
POWER OF ATTORNEY
A power of attorney may be special or limited to one specified act or type of act, or it may be general, and whatever it defines as its scope is what a court will enforce as being its scope. (It may also be limited as to time.) A person holding a general power of attorney was often referred to as an attorney general. Under the common law, a power of attorney becomes ineffective if its grantor dies or becomes “incapacitated,” meaning unable to grant such a power, because of physical injury or mental illness, for example, unless the grantor (or principal) specifies that the power of attorney will continue to be effective even if the grantor becomes incapacitated (but any such power ends when the grantor dies). This type of power of attorney is called Power of Attorney with Durable Provisions or Enduring power of attorney.
In some jurisdictions, a Durable Power of attorney can also be a “Health Care Power of Attorney”, an advance directive which empowers the attorney-in-fact to make health-care decisions for the grantor, up to and including terminating care and ending life supports that are keeping a critically and terminally ill patient alive. Health care decisions include the power to consent, refuse consent or withdraw consent to any type of medical care, treatment, service or procedure. A living will is a written statement of a person’s health care and medical wishes but does not appoint another person to make health care decisionsPeople with mental illness may prepare Psychiatric Advance Directives (PADs in some U.S. states) or Ulysses contracts as they are called in Canada. Ulysses contracts are powers of attorney that enable a patient to dictate preferences for care before becoming incapacitated by recurring mental illness. Although they are not used very often, there is speculation in some of the academic literature as to whether or not these advance directives are empowering for people with mental illness (Journal of Ethics in Mental Health 2006-1).
In some U.S. states and other jurisdictions it is possible to grant a springing power of attorney; (a power that only takes effect after the incapacity of the grantor or some other definite future act or circumstance). After incapacitation the power is identical to a durable power, but cannot be invoked before the incapacity. This may be used to allow a spouse or family member to manage the grantor’s affairs in case illness or injury makes the grantor unable to act, without the power of an attorney-in-fact before the incapacity occurs. If a springing power is used, care should be given to specify exactly how and when the power springs into effect.Determining whether or not the principal is “disabled” enough for the power of attorney to “spring” into action is a formal process. Springing powers of attorney are not automatic, and institutions may refuse to work with the attorney-in-fact. Disputes are then resolved in court, which is of course a costly, and usually unwanted, procedure.
Unless the power of attorney has been made irrevocable (by its own terms or by some legal principle), the grantor may revoke the power of attorney at any time by telling the attorney-in-fact it is revoked; however, if the principal does not inform third parties and it is reasonable for the third parties to rely upon the power of attorney being in force, the principal may still be bound by the acts of the agent, though the agent may also be liable for such unauthorized acts.