Among the most important documents you may make during your lifetime are a will and a power of attorney. And a third might be a living will.
According to M. Susan Sheppard, Surrogate Judge of Cape May County, NJ, who deals with these documents and the problems associated with them every day, mistakes can be costly and result in disputes that can tear a family apart.
"A a general rule, a will allows you to control your property upon death," Sheppard explains. "That means you can decide who will be your executor, a person you trust, to carry out your wishes as specified in your will. The executor is responsible for marshalling your resources, paying your debts and making the distributions set forth in your will. You should also name an alternate executor in case the first person named cannot perform those duties for whatever reason. The executor is entitled to a fee for work performed of 5% to 6% of the estate's value. If you should die without a will, the laws of New Jersey dictate and my court will appoint an administrator of your estate and that person may have to get a surety bond before they qualify.
"If you do not have a will, the intestate laws of New Jersey apply. Basically, in that case, your assets will go to your spouse first if there is one. If there is no spouse, your children will share equally the assets of the estate after debts and other bills are paid. If the spouse is a second marriage and no children resulted from that marriage, the spouse will get a percentage of the assets. If there is no spouse or children, the assets will be divided between other members of your family."
Judge Sheppard noted that the laws relating to some of the above may differ from state to state and it is the responsibility of the individual to determine what the laws are in the state where he or she resides to make sure their actions correspond to the appropriate laws.
"As a general rule," she notes, "intestate law will only apply to assets that are in the 'estate.' That means that life insurance, stocks, bonds or bank accounts that have a named beneficiary or are jointly held may not be part of your estate.
"If you have specific people or charities that you want to receive your property, then you should do a will and make sure they are specifically named as beneficiaries."
If you need to change your will, do not just write on your current document. Instead, create a new will with the change(s) included and have the new will notarized and witnessed by two people, as was the case with the original will. A witness must be at least 18 years old, fully competent, neither blind nor deaf, and should be available in court to testify if needed.
Another document that you should consider making is a power of attorney, which literally means that you assign to another person the authority to legally act on your behalf. The intent of the power of attorney is to have someone carry out your wishes when you are not capable for one reason or another, but in the hands of the wrong person your estate (and your wishes) can be ignored and your estate plundered. To give someone the power of attorney is a major decision and should be discussed with your attorney and/or your family before making that designation.
In addition to a will and power of attorney, a living will, or Advance Directive, should be considered. This document provides a general statement of your wishes regarding your health care in the event that you have lost the ability to make your wishes known. In effect, you can preclude medical treatment that prolongs life rather than improves recovery or quality of life.
At a time when there are new advances in medicine, it's critical to determine whether a treatment can provide a cure or just prolong life. A living will can spell out what you want to do in relation to these medical advances.
You don't have to have an attorney to prepare an Advance Directive, but you have that option. You don't have to consult with your doctor before preparing an Advance Directive, but, again, you have that option.
Judge Sheppard recommends that you carry a living will identification card with you at all times and give copies to your appointed representative and your doctor. Do not keep your copy in a safe deposit box.
As she points out, there are books written on these subjects and it's important that you seek the appropriate professional to discuss your plans regarding a will, power of attorney or a living will.
And for those who make all of the financial decisions in a family, including paying the bills and determining what insurances (and companies) are necessary, it's critical to instruct your spouse and/or your children how to go about this if you are no longer there or capable. That includes where your will and insurance policies are; if you've made provision for burial plots, etc.
At a time when a spouse and/or children are grieving the loss of a loved one, the burden of trying to handle all of these additional duties can seem overwhelming. A few minutes of instruction can make all of the difference.