Tuesday, May 28, 2024

Planning for death probably isn’t the most important part of your estate plan

by Robert J. Green, Esq.
| August 29, 2022 1:00 AM

It is natural to think of estate planning as planning for death. However, the planning documents that deal with how things will work while you are still alive but have become incapable of making your own decisions are arguably even more important to you since you will still be around and still be impacted by how those decisions are made. Does a person need a Power of Attorney document if that person already has a Last Will and Testament (“Will”)? It is a good question. The simple answer for almost everyone is yes – you should have both a Will and a Power of Attorney document. Actually, you should have two different types of Power of Attorney documents – one for health care purposes and one for financial purposes. Let’s look at why both a Will and Power of Attorney documents are necessary for all of us.

You use a Power of Attorney document to state who should be your substitute decision maker (your “Agent”) if you are incapacitated (unable to make your own decisions), while you are still alive. You would also state in this document the scope and limits of the discretion your Agent will have in making any decisions for you. A financial Power of Attorney Document gives your chosen Agent the legal authority to make financial decisions on your behalf, while a Health Care Power of Attorney Document gives your chosen Agent the legal authority to make health care decisions on your behalf. By having both types of Power of Attorney Documents in place, you can ensure someone of your choosing (not the Court’s) will be your surrogate decision maker if you need one.

On the other hand, a Will is a document used by you to state what should happen to your possessions and assets when you die, as well as who it is that should carry out those instructions you’ve left (your “Personal Representative” or “Executor/Executrix”). A Will tells the probate court judge how your estate should be administered after you are deceased.

So why do we need both documents? Simply because your Will generally has no effect until you are deceased and your Power of Attorney document generally has no effect once you are deceased.

As an example: imagine that your friend “Joe” were your Agent under a Power of Attorney document that gave him authority over your bank account (among other financial matters). Now imagine that you are incapacitated. Acting as your Power of Attorney Agent, Joe could make decisions for you regarding that bank account up until your death. However, Joe would have no legitimate authority over that bank account once you passed away, unless Joe was also your Personal Representative in your Will. In that case, Joe can provide the Will to the county probate court, and a judge can give Joe full authority over your bank account even though you are deceased. Now, acting as your Personal Representative, Joe can carry out your instructions regarding what to do with that bank account upon your death. (Note that although I’m not going into details about it here, you could also give Joe authority over your accounts after your death through a Trust instead of a Will, and doing so would mean Joe would not need to go through the county probate court to get that authority).

Both a Will and Power of Attorney documents are important parts of your “estate plan.” An estate plan is simply the collection of legal documents that virtually everyone should have in place. In Idaho, a solid estate plan should include, among several other documents, a Will, a Power of Attorney document for financial decisions, and a Power of Attorney document for health care decisions. Having only a Will or only Power of Attorney documents would leave most people venerable and leave their loved ones in a tough situation – possibly during a crisis. However, a quality estate plan includes the documents necessary to plan ahead for both death and incapacity.

My law firm is currently offering free telephonic, electronic, or in-person consultations concerning creating or reviewing estate planning documents.

Robert J. Green is an Elder Law, Trust, Estate, & Guardianship Attorney and the owner of Kootenai Law Group, PLLC in Coeur d’Alene. If you have questions about estate planning, probates, wills, trusts, powers of attorney, guardianships, Medicaid planning, or VA Benefit planning, contact Robert at 208-765-6555, Robert@KootenaiLaw.com, or visit www.KootenaiLaw.com.

This has been presented as general information and not as legal advice. Do not engage in legal decision-making without the advice of a competent attorney after discussion of your specific circumstances.