Do I Need More Than a Will?

Do I Need More Than a Will?

by Michelle Fabio, Esq., April 2016

You've done all the hard work to get yourself a last will and testament, so now you might be wondering, “Is a will enough?"

The answer is, “It depends."

What does it depend on? Mostly on you.

Three big factors that weigh into whether you need additional estate planning documents

such as a living will or advance directive, power of attorney, and living trust—are:

  • How old you are
  • Your marital status
  • Whether or not you have children

Your general well-being and lifestyle, like whether you smoke or regularly engage in extreme sports, are also considerations.

But perhaps the most important thing to think about is how prepared you want your affairs to be in the event of a sudden illness or accident.

Let's take a closer look at some of the documents you may want to include in your estate plan besides a will—whether to provide more guidance and protection for your loved ones or simply to better prepare your affairs for the unexpected.

Do I need a living will or advance directive?

First of all, it is important to understand the difference between a last will and a living will, also called an advance directive. A last will details how you want your property to be distributed after your death, while a living will provides the medical directions you want followed in the event you become seriously ill or incapacitated and cannot communicate such decisions yourself.

So really, it's not a matter of whether you need a living trust vs. will, but rather whether you also want to have a legal document in place that will make your wishes regarding medical care clear.

So, when do I definitely need one?

Obviously, if you have health concerns, you should create a living will as soon as possible. Advanced age is another good reason to have a living will in place, but, unfortunately, since none of us knows what the future holds and when we might actually need such a document, having a living will is a good idea for everyone.

Do I need a power of attorney?

A power of attorney is a legal document through which you, the principal, name someone—called the agent or attorney-in-fact—to have the authority to make decisions and take actions on your behalf. These actions may include paying bills, making business or real estate transactions, filing tax returns, and more.

A regular power of attorney ends if the principal becomes incapacitated; a durable power of attorney still applies in the event of incapacitation.

Moreover, you can have specific powers of attorney that serve different purposes:

  • A financial power of attorney gives your agent the authority to manage your financial affairs.
  • A medical power of attorney (or health care power of attorney) gives your agent the authority to make medical decisions on your behalf.

So, when do I definitely need one?

Similar to a living will, a power of attorney is an important document for everyone who doesn't have a crystal ball—that is, you never know when you might need someone to take over your affairs, whether financial or medical. Without the proper power of attorney in place, a court will have to appoint one for you. And that person may not be who you would have chosen.

Do I need a living trust?

Through a living trust, you, the grantor, retain control over property placed in a trust during your lifetime. Upon your death, the trust is turned over to the successor trustee, handpicked by you ahead of time, to distribute property to beneficiaries according to your instructions.

If this sounds similar to a last will to you, you're on the right track, but a living trust has some distinct advantages over a will—and the biggest of those is that it avoids probate. Property in a living trust passes directly to beneficiaries, bypassing probate, which means a fast and easy distribution to heirs without additional costs. A living trust does, however, have initial set-up and maintenance costs that a last will doesn't have.

Wills and trusts can work together to make sure your assets are distributed according to your wishes as quickly as possible, all while avoiding any unnecessary estate taxes.

So, when do I definitely need one?

If you are a young, married couple with few assets and no children, you probably don't. And, if you have few assets in general, you probably don't.

On the other hand, if you have significant assets, you might consider a living trust to help avoid probate costs and delays. And, perhaps most importantly, if you have minor children, a living trust can allow you to specify when your children will be entitled to the assets in the trust.

That said, as with all estate planning documents, a living trust can be extremely beneficial in the case of an accident or sudden illness. For instance, if a married couple dies at the same time in an accident, their estates, which may have gone to the surviving spouse either by will or state law, might then be subject to probate, with its accompanying delays and costs.

Planning for the Unexpected

Overall, it's a good idea to evaluate each type of estate planning document in light of your particular circumstances, including age, marital status, whether you have children, and your general health.

Remember, too, though, that a comprehensive estate plan takes into consideration that the unexpected often happens. If you want your affairs to be in order in case of a sudden illness or other emergency, you should strongly consider having documents besides a last will as part of your estate plan.

Ready to start an estate plan but need help deciding which estate planning documents are right for you? User our estate planning tool to help you decide which documents you need.