Nevada Estate Planning & Elder Law Information Blog

What Is The Most Common Mistake You Can Make In Estate Planning?

If someone were to ask me what the most common mistake is you can make in estate planning, my answer would be simple.  The most common mistake is simply not getting around to planning at all.  Remember the old adage "failing to plan is like planning to fail".  Well this is particularly true in the case of estate planning. 

  The best way to protect you and your loved ones, is to make the time NOW to plan your future estate.  Both you and your loved ones deserve to have a secure future.  Nothing is more frustrating or frightening to family members than having to guess at what they believe your wishes would have been.  You can take the guess work out of the equation by following these easy pointers:

1. Make a Will.  Everyone needs one.  If you do not draft a will, the state will decide what happens to your property after you die.  A will allows you to designate to whom and how, you want your property to pass.  Whether you have a minimal, modest or large estate, you will want to designate the person you wish to wrap up your business after you have passed away.  This person is called the executor of your estate.  Additionally, your family will already be dealing with the grief of your passing, you do not want to compound that grief by failing to leave any directions about how you want your personal property distributed.  If you want your wedding ring to go to your granddaughter, or your gold watch to pass to your son -- let them know in your will.

2.  Keep Your Beneficiary Designations Current.  I know I have written about this before, but I cannot say it enough -- in many cases the beneficiary designation will trump what is written in your will or trust, so make sure your beneficiary designations are consistent with your other estate planning documents.

3.  Execute Powers of Attorney to Plan for Incapacity.  Who will take care of things for you if you are unable to speak for yourself?  A Durable Power of Attorney and a Medical Power of Attorney can protect both you and your family's interests.  A Durable Power of Attorney allows the person you choose to make legal and financial decisions on your behalf.  A Medical Power of Attorney allows you to state in advance the kind of medical care you would want in the event you become incapacitated, and further allows you to indicate the person you would want to make medical decisions on your behalf if you are unable to speak for yourself.  If you do not have these documents, and attorney and the court will need to become involved at the time of your incapacity, which is not only time consuming, but can be a real financial burden for your family.      

Make the time today to see a professional about your future.  If you do not already have a relationship with a qualified estate planning attorney, please contact The Herr Law Group at 735-4377.  We would love to meet with you and talk to you about your planning options.

Why Do I Need a Trust if I Have a Power of Attorney

A common question is why a trust is necessary if you become incapacitated but have a power of attorney.  After all, if the person holding your power of attorney can transfer and sell assets on your behalf, what is the problem?

The answer is three fold.  First, depending upon the type of power of attorney you have given your designee (i.e. Springing, Durable, Limited, etc), that person may or may not have the authority to act on your behalf once you are found to be incompetent.  Should you die, a power of attorney ends, meaning that your family will have to go through probate to wind up your affairs. 

Next your power of attorney could be refused without additional documents to back it up.  Sometimes, banks and other financial institutions will not honor a power of attorney unless it is on "their" form.  Additionally, unless your power of attorney has been recently executed, others become reluctant to honor the power of attorney, fearing that the power of attorney has grown stale or outdated.

Finally, giving someone your power of attorney without directions on how it is to be used, is a bit like placing a child is a candy shop.  Given someone a blank check to do whatever he or she wants with your finances can be risky.  A trust acts as an instruction manual.  Just as a parent leaves instructions for a  babysitter before going out for the evening, a trust leaves instructions for your trustee about how you want to be cared for, what type of medical treatment you want, and how, in the event of your death you want your finances handled.  Thus the power of attorney with the trust becomes an effective tool, while the power of attorney alone can be very risky. 

What is a Power of Attorney

A Power of Attorney is a document you can use to authorize another person to perform certain acts on your behalf.  A Power of Attorney can be limited in scope, also called a special power of attorney, or can be very broad, which is known as a general power of attorney.  A Power of Attorney can be written to take effect immediately, or to take effect upon a person's incapacity or upon another designated event. 

When used in conjunction with your estate plan, a Power of Attorney can be a valuable tool.  It can be used to designate the person who would care for you and make decisions on your behalf were you to become incapacitated.  This can be particularly important if you are single and do not have family to assume this role, or your spouse or partner, would be unable to assume the added burden of caring for you, such as with a spouse who is themselves disabled. 

Since there are many types and uses for Powers of Attorney it is important to consult with an attorney to chose the type of document which is right for you and your circumstances.  For more information on Powers of Attorney check out the informational brochure published by the Nevada State Bar Association.