Making a will is something that many people put off until it is too late. This is often because they do not understand the benefits of having a will in place.
A will allows you to dictate what happens to your belongings after you die and can help ensure that your loved ones are taken care of. However, there are also other options available for estate planning, such as a power of attorney.
In this article, we will compare wills and power of attorneys and look at the advantages and disadvantages of each option.
Settlor Vs Grantor Table of Contents
What is a Power of Attorney?
A Power of Attorney is a legal document that allows someone to make decisions on your behalf. This can be in regards to financial, medical, or legal matters. A POA can be used in the event that you are unable to make these decisions yourself, either due to incapacity or being out of the country.
What is a Will?
A will is a legal document that outlines how you would like your assets to be distributed after you die. You can also use a will to appoint someone to act on your behalf in the event of your death or incapacity.
What is The Difference Between a Power of Attorney and a Will?
A Power of Attorney is a legal document appointing someone to make decisions on your behalf, should you become incapacitated. A Will is a legal document outlining your wishes regarding your estate and how it should be distributed after your death.
The main difference between a Power of Attorney and a Will is that a Power of Attorney can only be used while you are alive, whereas a Will only comes into effect after your death.
Another key difference is that a Power of Attorney can be revoked at any time, while a Will can only be changed by making a new Will.
What Are The Different Types of Power of Attorney?
There are two types of power of attorney:
Durable power of attorney is a legal document that gives someone else the authority to make decisions on your behalf if you become incapacitated.
Non-durable power of attorney, on the other hand, only applies when you're able to make decisions for yourself.
What Are The Different Types of Will?
There are four different types of will:
- Testate Will
- Intestate Will
- Holographic Will
- Nuncupative Will
A testate will is one that’s been made according to the laws of your state.
An intestate will is one that hasn’t been made according to the laws of your state.
A holographic will is entirely in the handwriting of the person who made it.
A nuncupative will is one that’s been orally declared.
What Are The Advantages of a Power of Attorney?
There are quite a few advantages of having a Power of Attorney. One advantage is that you can appoint someone you trust to make financial decisions on your behalf if you become incapacitated. This can give you and your loved ones peace of mind, knowing that there is someone who can handle your affairs if something happens to you.
Another advantage of a Power of Attorney is that it can be revocable, meaning that you can cancel it at any time. This gives you the flexibility to change your mind about who you want to handle your finances if your circumstances change.
Finally, a Power of Attorney is generally less expensive and easier to set up than a Will. This can be a big advantage if you don't have the time or money to invest in setting up a Will.
What Are The Advantages of a Will?
There are several advantages of having a will. First, a will allows you to control how your assets will be distributed after you die. You can specify exactly who will receive what and in what proportions. This can be very important if you have specific wishes for how your property should be divided.
Second, a will can help to avoid conflict among your heirs. If you die without a will, your property will be distributed according to the laws of your state of residence. This can often lead to disagreement and even litigation among your family members. By having a will, you can specify exactly who gets what, which can help to prevent such disputes.
Third, a will can be used to appoint a guardian for your minor children. If you die without a will, the court will appoint a guardian for your children. However, if you have a will, you can specify who you would like to serve as guardian for your children in the event of your death.
Finally, a will can help to ensure that your final wishes are carried out. For example, you can use your will to specify how you would like to be buried or cremated. You can also use your will to make donations to charities or other organizations that are important to you.
What Are The Disadvantages of Power of Attorney?
There are a few disadvantages of having a power of attorney that you should be aware of.
Firstly, if you become incapacitated and unable to make decisions for yourself, the person you have appointed as your attorney will have complete control over your finances and your property. This can be a good thing if you trust them implicitly, but it can also be a bad thing if you have any concerns about their ability to make good decisions on your behalf.
Another disadvantage of power of attorney is that it can be revoked at any time, either by you or by a court. This means that if your relationship with your attorney changes, or if they become unable to act on your behalf for any reason, your power of attorney arrangement may no longer be valid.
Finally, it's important to note that a power of attorney does not override your will. If you have appointed someone as your power of attorney and then later create a will that contradicts the instructions they were given, the will takes precedence.
What Are The Disadvantages of Will?
There are a couple of disadvantages to having a will.
First, it can be expensive to create a will, especially if you hire an attorney to help you. Second, a will is only effective after you die, so it cannot help you if you become incapacitated and unable to make decisions for yourself.
Finally, a will can be contested by your heirs, which can cause conflict and delay the distribution of your assets.
So, Which One Should You Use?
This is a difficult question to answer, as it depends on your specific circumstances. If you have a large estate or complex financial affairs, then a Will may be the best option. On the other hand, if you have a small estate and relatively simple finances, then a Power of Attorney may be all you need.
Of course, there is no right or wrong answer, and it ultimately comes down to your personal preferences. Whichever option you choose, just make sure that you have a plan in place so that your loved ones are taken care of if something happens to you.
What Are Some Alternatives to Using a Power of Attorney or a Will?
Some people might choose to use a living trust as an alternative to using a will or power of attorney. With a living trust, you can specify how you want your assets to be distributed after you die, and you can also appoint a trustee to manage the trust.
Another option is to create a revocable trust, which is a trust that can be changed or revoked at any time. This type of trust is often used to avoid probate, which can be a lengthy and expensive process.
Finally, you could choose to use a durable power of attorney, which is a power of attorney that remains in effect even if you become incapacitated. This option allows you to appoint someone to make financial and legal decisions on your behalf if you are unable to do so yourself.
What Are Some Tips For Using a Power of Attorney?
A power of attorney can be an extremely useful tool, but there are a few things to keep in mind when using one.
First and foremost, it’s important to make sure that the person you’re appointing as your attorney is someone you trust implicitly. This person will have a great deal of control over your finances and your property, so it’s crucial that you pick someone who you know will act in your best interests.
It’s also important to be very specific about the powers you’re granting to your attorney. The last thing you want is for them to have too much power and authority, as this could lead to abuse. Be sure to spell out exactly what they’re allowed to do on your behalf, and limit their power as much as possible.
Finally, keep in mind that a power of attorney can be revoked at any time. So if you have any concerns about the person you’ve appointed, or if you simply change your mind, you can always revoke the power of attorney and appoint someone new.
What Are Some Tips For Using a Will?
There are a few key things to keep in mind when using a will. First, you should make sure that your will is kept up to date. This means reviewing it every few years and making changes as needed.
Secondly, you should keep your will in a safe place where it can be easily accessed by your loved ones. Lastly, you should make sure that your will is legally binding in your state.