Estate Planning 101: Essential Tips for Protecting Your Assets
Estate Planning Blog: Q&A with Darla Daniel, SVP
Q1: What is the difference between a general durable power of attorney and a medical durable power of attorney, and why do I need both?
A: A “general Durable Power of Attorney” is a document in which you appoint a trusted person, such as a family member or friend, as your “agent” to manage your financial affairs and property if you become incapacitated. This helps avoid the need for a court-appointed conservator, which can be costly and cumbersome.
A “Medical Durable Power of Attorney” is a similar document in which you name a trusted person to make medical decisions for you if you become unable to do so. This ensures that your medical wishes are carried out, and also helps avoid the need for a court-appointed guardian, which can also be costly and cumbersome.
Q2: My spouse and I have minor children, and we are just beginning to invest and build savings. Is estate planning or getting an accountant really necessary?
A: Yes. It’s important to have a comprehensive estate plan in place, which can be created with the help of an estate planning attorney. Your plan should include basic powers of attorney, as mentioned above. It should also address the following key issues:
● Guardian for children: A will can be used to nominate a trusted guardian for your minor children in the event that both parents pass away.
● Trustee for children: A trust can be established to manage assets and investments for the benefit of your children until they reach adulthood. It’s important to coordinate the titling of your assets and your beneficiary designations with the language in your will to avoid the need for a court-appointed conservatorship.
● Choice of trustee: The trustee should be someone you trust to manage your assets safely and prudently. Consider whether the person you name as trustee has the knowledge, experience, and time to manage investments, or if they would benefit from having a corporate fiduciary’s help.
● Successor fiduciaries and beneficiaries: Estate planners often recommend nominating a first and second choice of guardian and trustee in your will, as well as designating successor beneficiaries.