What are the three documents that everyone needs in their estate plan regardless of assets or income?
Those three estate planning documents are a last will and testament, an Advance Directive for healthcare and a power of attorney. The reason everyone needs these is because they tell other people what to do in the event some unforeseen circumstance happens to you and you are no longer able to control or manage your assets.
A will is designed to tell everyone else or to tell the world what it is you want to happen to your assets when you pass away. We would draw out a will for you with your specific instructions and that way there are no questions or issues about what is supposed to happen to your assets when you pass away; you design and tell us ahead of time and draw it up in a last will and testament.
The second document everyone needs is an Advance Directive for Healthcare. That document has two parts; one is a living will and the other is a medical power of attorney, or healthcare proxy, same thing. Again it is a two part document.
With the living will you state your wishes about whether you do or don’t want to be on a respirator or you do or don’t want the feeding tube in the event you become incapacitated or injured to the point where you’re not able to survive on your own by natural means whether you want to be on any of these machines and for how long et cetera.
The doctors don’t know and your family doesn’t know and it’s important that you set these instructions out ahead of time, otherwise if something tragic like this happens your family’s not going to know what to do. By doing an advance directive for healthcare you can set those instructions out ahead of time and save your family a whole lot of heartache.
The second part of an Advance Directive is a healthcare proxy, or medical power of attorney. That power of attorney you designate someone to help the doctors make decisions if something like this happens to you. It’s hard to cover every, single thing in the first part of the document with a living will, so the healthcare proxy is designed to name someone to help make those decisions.
The third document that everyone needs is a financial power of attorney, or durable power of attorney. Durable power of attorney is designed to give someone else the authority to act legally on your behalf while you’re still alive; allow them to cash checks, pay your bills, execute documents and things like that. Unless you have one of these and you become incompetent and you’re not able to handle your own affairs then someone has to go to the probate court, which is a time consuming and very expensive process, so by having the power of attorney you give someone that authority in advance should you ever need someone to act on your behalf.
For more information about these documents or estate planning in general in Alabama, visit www.AlabamaEstatePlanningGuide.com to get a copy of our book on Estate Planning or register for one of our free estate planning workshops by visiting www.AnnistonEstatePlanning.com or calling us at 256 251-2137.