Over the past year of the pandemic, many people learned just how critical it is to protect themselves both legally and financially. You never know what’s around the corner. And while all of us can have the passing thought “That’ll never happen to me,” if there’s one thing 2020 taught us, it’s that unexpected illness or death does not discriminate.
To set yourself and your family up for the best possible outcome during such an unwanted scenario, you should have a living will, power of attorney, or both. But which is better? First, let’s dive into the differences between each of these important legal items.
What is a Will?
When a person who passes away doesn’t have an up-to-date will, the state can decide what to do with their assets. If that’s you, your family could be left with nothing. But if you create a will, you can dictate which of your assets goes to whom. A lwill provides peace of mind by guaranteeing your loved ones will be taken care of when you’re gone.
What’s in a will? It contains:
- Designation of an executor — a person who carries out the provisions of the will
- Beneficiaries — people who are inheriting your assets
- Directions for how and when the beneficiaries will receive the assets
- Designation of guardians for any minor children
If you don’t have a will and don’t know where to start, an attorney can help you create or update your will. To be considered complete and therefore valid, the living will has to be notarized.
What is a Living Will?
A living will is a document that dictates what happens with your medical care if you become incapacitated. These documents are also called advanced directives.
What is a Power of Attorney?
A power of attorney (POA) document dictates who can make important healthcare, financial or legal decisions on another person’s behalf. This legal document is a private way to appoint a decision-maker in the event that you can no longer make those decisions for yourself. For example, if you are hospitalized and in a coma, a power of attorney can step in on your behalf.
Even if you don’t think you’ll ever need a POA, it’s much faster and affordable to create one in advance than make your loved ones go to court to have a decision-maker appointed.
When deciding who to designate as power of attorney, think about who you would trust financially and legally. This person will have the ability to sell property, pay bills, or handle a business in your absence. It needs to be someone you trust completely.
Which is Better?
Now comes the ultimate question: Do you need both a will and a power of attorney? If not, which is the ideal option to pursue?
The answer to this is subjective, but let’s consider a few facts:
- A living will allows you to spell out most of your healthcare concerns, but it may not cover every possible scenario. It’s possible to forget or accidentally exclude something.
- A will lets people know how you wish to have your property disposed of after you die.
- A durable power of attorney allows someone to advocate for you without overriding your living will. This person can make financial decisions that affect your estate and your care, outside of what is spelled out in your living will.
While you can specify what types of decisions your power of attorney can make, be careful not to make too many limitations. Remember that your living will cannot cover every possibility, so what it can’t cover, the power of attorney should.
In our expert opinion, the best possible scenario is to have both a living will and a power of attorney. Neither is better than the other because both have important purposes, but when used alone, both also have limitations. When combined, you can make sure all of your legal, financial, and healthcare assets and decisions are covered.
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