Last Will and Testament vs. Power of Attorney
A last will and testament and power of attorney are estate planning documents that are effective under different circumstances. Both forms offer peace of mind to your loved ones; however, they do not replace one another. Here is how each document acts to advance your wishes and how they work together to create an effective estate plan.
What Is a Last Will and Testament?
A last will and testament addresses property distribution after you die. It can also create trusts and designate guardians for minor children. A will allows you to carry out your wishes by appointing an executor (or personal representative in some states) who administers your estate in a legal process called probate. Whoever is drafting the will is a testator, while those receiving property or money from your estate are beneficiaries.
Once you create your will, you must sign it in front of two witnesses who are not your estate beneficiaries. In most states, witness signatures must also be notarized. Many people hire attorneys to create their estate plans mainly because witnesses and notary publics are readily available in law offices.
If you need to change your will, you either draft a new will (which revokes previous wills) or a codicil (which makes changes in your will, e.g., changing your executor). These new documents must also be witnessed and notarized.
A will is not effective until your death. If you need someone to manage your property while still alive, execute a power of attorney.
What Is a Power of Attorney?
A power of attorney appoints an agent (also called an attorney-in-fact) to manage your affairs. If you wish to appoint someone to manage business, financial, legal, family maintenance, personal and real property, and trust matters, you sign a durable power of attorney. For healthcare decisions, you execute a medical power of attorney and/or a living will (some states combine these into two documents). Medical or healthcare powers of attorney address medical decisions if you cannot communicate, but they do not always include end-of-life decisions. Living wills specifically express your desires regarding treatment for terminal conditions and end-of-life.
You can limit the powers and effective time of your power of attorney. For example, if you cannot attend a real estate closing, you can appoint an agent who only manages that closing. You can also specify an agent for family maintenance and another to run your business. Also, rather than a durable power of attorney, which is effective immediately, you can create a springing power of attorney, which is not effective until a healthcare professional determines you are incapacitated.
A power of attorney becomes ineffective when you die. For wishes and property management after your death, execute a last will and testament.
Do They Have Any Effects on Each Other?
Not really. The last will and testament and power of attorney work together in that one is effective while you are alive and one is effective after you pass away. In a way, they fill in for each other, so you can have a big picture estate plan that addresses all your concerns, including management of daily affairs, medical decisions, and distribution of property after death.
There are different impacts if you do not have a will or power of attorney. If you become incapacitated and do not have a power of attorney, your loved ones must bring a court proceeding to appoint a guardian for you. This individual may not be your top choice to manage personal or business matters, so you only gain certainty if you execute a power of attorney.
If you die without a will, the court determines property distribution through intestate statutes. These state laws prioritize immediate family and do not have provisions for giving money to charity, taking care of pets, or making sure unmarried partners receive a share of your estate. Even if your power of attorney designates someone to take care of these matters, it is no longer in effect after you die.
Who Should Keep Your Will?
Provide copies of your will to close friends or family members, your executor, and your estate planning attorney. Keep the original of your will in a safety deposit box or a fireproof filing cabinet.
Who Should Keep Your Power of Attorney?
Provide copies of your power of attorney to close friends or family members, your agent, and your estate planning attorney. Keep your original power of attorney in a safety deposit box or a fireproof filing cabinet. If you execute a medical power of attorney, provide a copy to your primary care provider too.
Do I Need an Attorney to Create a Will or Power of Attorney?
If you are a wage earner, rather than a business owner, and your property disposition plan is easy, you can likely find online forms for a will or power of attorney and complete them. Once you finish them, call an estate planning attorney to review your documents. You will receive the reassurance that they are enforceable, plus you can likely sign your document and have easier access to witnesses and notary publics to finalize your will and power of attorney.
However, there are circumstances where involving an attorney is critical. These include:
- Chronic or terminal illness
- Majority ownership in a business
- Substantial real estate holdings
- Family conflict involving live-in partners, disinherited relatives, or life circumstances (e.g., gender transition, sexual orientation, or religion)
You may pay more to retain legal advice, but the peace of mind is often worth it. Consider cutting down on these expenses and having something available for attorney review. Even if you complete any legal document incorrectly, your attorney gains a solid idea of your desires.
Finally, hiring an attorney creates a more complete estate plan. Besides drafting a will and durable power of attorney, you may also benefit from a:
- Healthcare power of attorney
- Healthcare directive
- Do not resuscitate order (DNR)
- Living will
- Living or testamentary trust
Need a Will and Power of Attorney? Find a Local Estate Planning Lawyer
While this article contains a detailed explanation of the difference between a last will and testament and power of attorney, speaking with a knowledgeable estate planning attorney is the best course of action. They can help you determine your will and power of attorney's contents and recommend other documents for your estate plan.