Tuesday Tip of the Week: August 29, 2017
Making Sure Your Wishes are Followed: Wills, POA’s and Trustees
We all want to leave a lasting legacy. We want to make sure that the ones we love are taken care of should the unexpected happen to us. I speak about this a lot in reference to life insurance and income protection insurance. There is a saying in the insurance industry that rings true for many. “People don’t plan to fail, they fail to plan.” This becomes vitally important when it comes to making sure your children are taken care of should something happen to you. Many people don’t realize the implications of dying intestate, which means without a will. Everything you do for your children will now have to be done by someone else. Being prepared for this is essential and it actually doesn’t take too much planning. All it takes is putting the right documents in place for safe keeping. Doing so will ensure that your wishes are granted if you have a life altering event. Not doing so could leave the fate of your children in the hands of strangers. In this post, I am going to discuss wills, powers of attorney and trustees and why it is crucial that every parent should have them.
A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children. To maximize the likelihood that your wishes are carried out, you want a will that is written and signed by you and your witnesses. If your will does not meet these standards, your instructions may not be carried out. This becomes especially important with children. You will need a will to make sure assets are distributed as you wish to your children. This helps ease fighting over assets that may happen should the dispute end up in court. Many families have been torn apart over estate claims. It is also important if you are a business owner to have a will. A smooth transition from the deceased owner to the person(s) of their choice is key.
A trustee is a person or firm that holds and administers property or assets for the benefit of a third party. A trustee may be appointed for many purposes, such as in the case of bankruptcy, for a charity, for a trust fund or for certain types of retirement plans or pensions. Trustees are trusted to make decisions in the beneficiary’s best interests and often have a fiduciary responsibility to the trust beneficiaries. Trustees become especially important when it comes to having minor children, as your wishes for your children are paramount. It is the trustee that will manage your assets when it comes to dispensing them amongst your children. The key part of a trustee is trust, and this should be a person that you know will act on your behalf. The will is the playbook for dispensing the assets. The trustee is the quarterback who will deliver on those wishes. It is vital to have a trustee mentioned in your will.
Power of Attorney
A power of attorney (POA) is a legal document giving one person (the agent or attorney-in-fact) the power to act for another person (the principal). The agent can have a broad legal authority or limited authority to make decisions about the principal’s property and finances. The power of attorney is often used in the event of a principal’s disability or illness, or when the principal can’t be present to sign necessary legal documents for financial transactions. A person appointed as power of attorney is not necessarily an attorney. The person could just be a trusted family member, friend, or acquaintance. Once again, this document becomes crucial when dealing with young children as their welfare is at stake.
These three components of your personal financial picture are extremely important. They often work in conjunction with each other. Such is the case if the party involved dies and life insurance proceeds need to be held in trust until a minor has reached legal age. I recommend to all my clients to work with a lawyer to have a will and power of attorney established immediately. You also need to speak with a trusted family member or friend to make sure you have a trustee in place. Many people choose a godfather and godmother to watch over their children should something happen. These people also need to be assured that they will be able to afford taking care of your children should you both die. This means having assets or life insurance proceeds directed to them as well as your children in trust. You also have to revisit these documents on a regular basis. I suggest tax time as finances are in the air. Each year quickly read over the documents to make sure these are still your wishes and the trustees are still on board with the plan or even alive for that matter. It is all part of a comprehensive plan that makes sure your wishes are granted if you were to fall victim to injury, illness or death. Creating the plan will lead to an ease of the complications that arise with tragedy. Not creating one could lead to chaos and confusion.
Thanks for reading my post today and don’t forget to tune in tomorrow when I discuss how to protect your children from injury, illness or death. Please don’t hesitate to contact me with any questions at email@example.com. Have a great day friends!
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at www.budgetboss.ca