Today, we’re going to talk about the three documents that are the foundation of your estate plan. The three documents are your will, your power of attorney, and your healthcare power of attorney, sometimes called an advance directive or healthcare proxy.
#1 Last Will and Testament
Why are these the three foundational documents of your estate plan? The will is what tells everybody, “This is where I want my assets to go. I want Bobby to get my guns, I want Sally to get my rings, and I want the rest of whatever I have to go to my brothers and sisters. Or as typical with a married couple, “I want everything to go to my spouse, and if my spouse doesn’t survive me, I want everything else to go to whomever or whatever.”
The other important part of the document is it allows you to name who you want to carry out these wishes, the executor, and it also allows you to name who would be the guardian of your kids if you have children under the age of 18. Rather than let the courts determine who’s going to be the guardian of your kids, you name the person in your will. Guardianship in the will only comes up if there’s no surviving parents left. The surviving parent is typically always the remaining guardian unless there’s other issues that make it so that can’t happen. But those are the most important parts of the will. It tells them what to do with your assets after you’re gone. That’s the bottom line.
#2 Power of Attorney – General
The second foundational document is the springing power of attorney. Now, in a future episode, I’ll go more in depth on what a power of attorney is, springing versus immediate, and the different types you can have. But a springing power of attorney is a power of attorney that only comes into effect when a certain thing happens. In this case, for estate planning purposes, it’s incapacitation. When your doctors say you are incapacitated, this springing power of attorney comes to life and allows somebody else to act as your agent during your incapacitation.
You might be wondering, why would I need this? The main reason you need it is for assets in your name alone. To make everything simple, say there’s a husband and wife, and the husband gets into a car accident, and the doctors say he has brain swelling and they need to put him in a coma for one to two weeks till the brain swelling goes down, then they’ll pull him out of the coma. But during that period, anything that’s in his name alone is untouchable by the wife, be it a checking account, savings accounts, bill paying accounts; all of that would be untouchable by the wife. Any bills that are in his name alone, say a car loan is just in the husband’s name, she would not be able to call and get payment information on that car loan during that timeframe, because she is not power of attorney and she’s not him. The only person that can do that is him.
Another common issue could be your cable bill. The husband’s in a coma. The wife wants to cut the cable bill down, make it less. She calls and they say, “I’m sorry, we can’t talk to you because you’re not Joe Smith. You’re Sally Smith.” If she goes on to explain, “He’s incapacitated. He can’t do anything,” that doesn’t matter. That doesn’t matter. They don’t care. They want to see a power of attorney.
#3 Healthcare Power of Attorney
The third document is the healthcare power of attorney, or healthcare proxy or advance directive. This document lays out a couple things. They both get into a car accident, they’re both in a coma, nobody can make a decision. They’re both incapacitated. The husband’s healthcare power of attorney would most likely list his wife first as the next person to make decisions about his healthcare, and then after that, maybe it’s his brother. Well, in this situation, the wife is already incapacitated as well, so now the brother could work with the doctors on the husband’s care.
Additionally, in this same document, you can lay out your end of life wishes, such as “if I only have hours or days to live, I don’t want to be on a breathing apparatus”. “If I can’t eat myself, I don’t want you to feed me”. “If the only way I’m surviving is on respirator, my body can’t breathe on its own, take me off it”. But at the same time, you can also say, “Give me as many painkillers as possible to lessen the pain.” Both power of attorneys I’m going to talk about a little bit more in-depth in its own episode, I don’t want to make this too long. The most important thing I want you to understand, are the three documents you need for your estate plan, the foundational documents, and that’s the will, the general power of attorney, typically springing, and then the healthcare proxy, also called advance directive or healthcare power of attorney.
If you don’t have any of these, the best time to do it is yesterday and today. So, look it up, understand it more. You can check my website for more information on these areas, or you can call me, make an appointment and come in. We can have a consultation and talk about it and see exactly what you need and what meets your needs. As always, if you’ve enjoyed this, comment below. Hit the like button, subscribe. If you know somebody that this might be beneficial for, somebody that doesn’t have an estate plan, or somebody that just wants to learn more about it, name them in the comments, email it to them, share it with them so they can take a look through it and see if they need some help, too.Strategy Session by Phone Strategy Session in Person