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DIY Estate Planning: Wills and Durable Powers of Attorney

Posted By Communications Manager, Tuesday, March 22, 2016

Having a new baby ranks right up there with the world’s most disruptive personal transitions. There’s just nothing like major new responsibilities, sleeplessness, arguing with your spouse, placating your other children (and pets) and dealing with caring for someone 24 hours a day who can’t even hold up her head.

On top of that, there’s planning for that new person’s future.

Any parent of young children needs three basic estate planning documents: a Will, a Durable Power of Attorney and an Advance Health Care Directive.

Here’s why: A Will allows you to nominate guardians to care for your children to age eighteen in case you die before they reach adulthood. A Will also allows you to put a management plan in place so that the money you leave your children can be managed for them until they are old enough to manage it for themselves.

A Durable Power of Attorney appoints someone to act as your Agent in case you are incapacitated, so that someone can pay your bills, take care of your property and pay for your care. Finally, an Advance Health Care Directive appoints someone to make medical decisions for you if you can’t do so, and allows you to state your wishes for end of life care.

If that sounds daunting, don’t worry. These three basic estate planning documents are definitely ones that you can do yourself, using forms that are available on the internet. While it’s true that an estate planning attorney can help you to prepare them, the self-help versions are legally valid, accomplish the basics and are way better than doing nothing at all.

Making Your Will
Your Will doesn’t have to be fancy to accomplish two main goals: appointing guardians and managing your children’s money to a reasonable age. If you don’t have a Will and you die, a judge is going to appoint a custodial guardian to care for your children to age eighteen and a property guardian to manage their money to the same age. There are two things wrong with this picture: 1) the judge doesn’t know your family (and your sister-in-law, for example) as well as you do, so not nominating guardians means giving a stranger the power to make a decision that you are best equipped to make; and 2) most eighteen-year-old kids are just not mature enough to manage significant money, and any judicially appointed guardian’s role has to end at eighteen when your child (believe it or not) becomes a legal adult.

To make a simple Will, you have to decide four things:

1) Who to nominate as a guardian. It is best to pick at least two people, so if your first choice can’t do it, you have a back-up.

2) Who to name as an Executor. The executor is the person who will administer your estate. The executor will pay final taxes, outstanding debts, collect and value your property, and distribute it as directed by the Will.

3) Who to name as a Trustee. If you are going to leave your children money in trust to a certain age, the Trustee is the person who is going to manage and distribute their money to them until they reach that age. It can be the same person as your executor, or someone else.

4) When your children should inherit their money outright. Since your children are young, you can’t know how well they’ll manage money yet, so just use yourselves as an example: how old were you when you could manage money responsibly? For some, twenty-five is a good age; for others, it’s thirty-five.

Once you’ve got those four things figured out, you can put together a simple Will, sign it in front of two witnesses who don’t inherit anything, and you’re done. Do not notarize a Will. Store it somewhere safe. Tell your executor where to find it.

Here are two online resources that you can use:
1) The California State Bar offers a free statutory Will. This is a quite basic, fill-in-the-blank form, but it does cover the essential things and is legally valid. This Will allows you to name a custodian to manage your children’s money to age 25. Download the statutory Will at the State Bar’s website.

2) Nolo offers two inexpensive ways to create Wills that are more comprehensive than the State Bar’s basic one. First, for $34.99 you can create an Online Will that you can print out and will allow you to nominate guardians and executors, set up a trust for your children and forgive any debts that people owe you. Second, for $49.99 you can purchase Quicken WillMaker Plus 2015, which will allow you to create and print out a Will as well as Durable Powers of Attorney and Advance Health Care Directives.

There are other online options out there, but these two are the ones that I recommend. The State Bar is entirely trustworthy and so are the editors at Nolo, all of whom are attorneys.

Both the Durable Power of Attorney and Advance Health Care Directive appoint an Agent to act for you if you become incapacitated. They are both important parts of every estate plan, since all of us may become sick or hurt over time.

Your Durable Power of Attorney
The Durable Power of Attorney applies to your property—your Agent can write checks on your account, hire people to take care of your house, withdraw money from your retirement accounts to pay for your care and file your tax returns. Younger persons may want a Durable Powers of Attorney that only becomes effective when the person is incapable of managing their own affairs. This is called a “Springing” Durable Power of Attorney because it “springs” into effect when you need it, but not before. Usually, two doctors must sign letters stating under penalty of perjury that you are incapable of managing your own affairs before your Agent can act.

The alternative is to sign a document that is effective upon signing – this can be appropriate for people who are traveling, who want to minimize the hassle of making the document effective or who are old or sick now and need immediate help managing their property.

Your Advance Health Care Directive
An Advance Health Care Directive names Agents to make health care decisions for you and lets you state your end of life wishes.

You may have already signed an Advance Directive, since that’s part of every hospital’s pre-admittance paperwork. If you are a member of Kaiser, or other large health care organizations, you may already have signed one with your doctor.

If you don’t have one yet, here are two excellent online options:
1) The California Office of the Attorney General makes a fill-in-the-blank Power of Attorney available for free.

2) If you want more advice and information about what to do, the California Medical Association sells an Advance Directive kit online for $6 that provides much helpful information.

Feel Good, Not Guilty!
Too many people waste their energy feeling guilty about not having an estate plan when they could be using that energy to go ahead and get the basics done. Trust me, if you need an estate plan (because you have kids, a spouse, a job, and some assets) you have the skills needed to get this done.

Liza Hanks is an estate planning attorney at Finch Montgomery Wright LLP and author of the free e-book The Family’s Guide to Wills and Estate Planning. She writes two blogs:The Palo Alto Estate Planning Blog, and Ask Liza: Nolo’s Estate Planning Blog.

Tags:  finances 

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