Wills & Power of Attorney

When it comes to estate planning, it is important to include provisions for what is to occur with a person’s affairs both while they are still alive, as well as after their death.

A set of documents that direct the wishes of a person during incapacitation, as well as after death, are vital to ensuring that the person’s wishes are carried out exactly as they want and not left to uncertainty.

A highly effective way to ensure a seamless transition for a person’s affairs after their incapacitation or death is to have a durable power of attorney and a will in place.

A Durable Power of Attorney and a Will:

A power of attorney and a Will are separate documents that provide different protections to a person’s estate.

A durable power of attorney is used to direct a person’s affairs while they are still alive. The POA can become effective immediately if the person needs help dealing with their day-to-day affairs, or it can be set to become effective only after a person is incapacitated and cannot make decisions for themselves.

While a power of attorney allows a person to appoint an agent to administer to their needs while they are still alive, the durable power of attorney ceases upon the death of the individual. This is when a will is needed.

A power of attorney can be used to nominate a power of attorney to represent an individual and their affairs in several different areas should they become incapacitated.

What Is a Will?

A last will and testament is a legal document that controls what happens to a person’s property and assets after their death.

Wills allow a person to grant their assets or property to certain beneficiaries and determine what and how much of the estate they each will receive. Once a will is in place, the executor of the will, who is appointed by the individual, is in charge of dividing up the assets of the estate according to the wishes of the principal.

A Will should at the very least outline the following:

  • Who will handle your estate when you pass (the “Executor”)
  • How taxes and debt (if any) should be paid
  • Names of appointed Guardians for your children
  • The distribution / allocation of assets

What happens to personal and real property?

If a person dies without a will, it is left up to the courts to administer the individual’s assets according to the laws of the country. This process is based upon pre-established formulas that give general guidance to the courts on how to divide a person’s estate.

Usually, an executor is appointed by the court and has no knowledge of the wishes of the individual and they must act according to arbitrary rules set forth by the court. This can lead to an estate being divided up in a manner that is not consistent with the wishes of the deceased or the family.

What is a Power of Attorney?

Power of Attorney (POA) is often established when a senior person of sound mind can appoint a person to act on their behalf, giving that person the “powers” to make decisions on his or her behalf.

When a person grants another person the responsibility of being their Power of Attorney (POA), that person needs to find out what authorities were granted to them regarding the person’s medical and financial decisions.

Whilst there are various types of Power of Attorney, Northern Cross offers a focus on the following given their relation estate planning.

The Two Types of Power of Attorney:

Lasting Power of Attorney – is also known as a “durable” Power of Attorney. It does not terminate if you become disabled or incapacitated and is a written document that authorises another person (grantor/principal) to represent or act on your behalf in private affairs, business matters, or other legal matters.

Healthcare Power of Attorney – is a document that designates a representative or agent to advocate for you when you are unable to make or communicate health care decisions. The person you select should be someone you trust (family member relative, friend, co-worker, doctor, nurse) to act as your agent if you are unable to speak for yourself.