Estate planning is a process involving the counsel of professional advisors who are familiar with your goals and concerns, your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker.
Estate planning covers the transfer of property at death as well as a variety of other personal matters and may or may not involve tax planning. The core document most often associated with this process is your will.
What is a Power of Attorney (POA)?
A Power of Attorney is a legal document you use to allow another person to act for you. You create a legal relationship in which you are the principal and the person you appoint is the agent. A Power of Attorney specifies the powers you give to your agent. The powers can be limited or broad. For example, if you are selling your house, but unable to attend the closing, you can give someone the power just to sign the deed in your absence. Most durable powers of attorney, however, give your agent the power to do almost anything you could do.
Banks, brokerage firms, and other financial institutions may require you to sign one of their own forms. The law requires that these third parties accept the power of attorney if it its acknowledged and provides for a process for verification if there are still questions.
What Is a Will?
A will is a written document-signed and witnessed-that indicates how your property will be distributed at the time of your death. It is revocable and subject to amendment at any time during your lifetime. It also allows you to appoint a guardian for your minor children.
What Is a Living Trust?
A living trust provides lifetime and after-death property management. If you are serving as your own trustee, the trust instrument will provide for a successor upon your death or incapacity. Court intervention is not required. Livings trusts also are used to manage property. If a person is disabled by accident or illness, the successor trustee can manage the trust property. As a result, the expense, publicity, and inconvenience of court-supervised distribution of your estate can be avoided.