What is Your Most Important Estate Planning Document?

What is Your Most Important Estate Planning Document?

Assume that you and your husband have been happily married for 50 years. You have two children and you get along with them and their spouses. Imagine that! Your home and bank accounts and investments are in joint tenancy. Life insurance and IRAs are paid to the surviving spouse, otherwise to your children equally.

What if you didn’t have a will? First, a will controls only property in the deceased person’s sole name. Because of joint tenancy and beneficiary designations, the will does not come into play because your assets are paid to or owned by you at your husband’s death.

The property of the surviving spouse goes to the children equally at your death, even if there is no will. The same result will occur by law as by your simple will. You may, however, name the personal representative for your estate in your will.

Is it your health care durable power of attorney? Without it, the physician selects a “proxy” by consensus when the patient lacks the ability to give informed consent. The consensus would include your children. You don’t have to go to court to get a proxy appointed.

A general durable power of attorney is very important. Without it, even a spouse may not cash in or change the beneficiaries to IRAs, deferred annuities, life insurance or deal with any property in the name of the spouse only. For instance, the husband may own a business interest or oil and gas royalty in his sole name and an interest in your home. You would have to petition the court for the appointment of you as conservator for your husband: an unnecessary legal expense and delay.

Many good reasons exist to have wills that depart from the statutory pattern, for instance by creating trusts for the children, making gifts, etc. Nevertheless, in this happy-family case, the “Achilles heel” is the lack of a general durable power of attorney for finances. Without it, the spouse or the children may have to get the powers they need from a court.