A hospital stay can leave someone unable to pay their bills. An accident can put a spouse or family member in charge of financial decisions. A death can leave loved ones sorting through property, accounts and other responsibilities while also dealing with the loss itself. None of these situations requires someone to be wealthy or own a complicated estate.
Estate planning can help put instructions in place before those situations come up. For many Wisconsin adults, three documents can provide a useful starting point: a will, a POA for finances and property, and a POA for health care. Each serves a different purpose, and understanding those differences can help people decide what type of planning may fit their circumstances.
1. A will can explain what happens to property after death
A will lets a person state how certain property should be distributed after death. It can also address other important matters, such as naming a personal representative to handle the estate and, in appropriate circumstances, nominating a guardian for minor children.
However, a will may not control every asset. Some property passes outside probate through arrangements such as beneficiary designations or joint ownership.
A will can therefore be useful even for someone without substantial wealth. A person may own a home, vehicle, bank account, personal belongings or other property that requires planning.
2. A financial power of attorney can help during incapacity
A will addresses what happens after death. A durable POA for finances and property serves a different purpose: It can authorize another person to act on someone’s behalf while that person is alive.
Under Wisconsin law, a durable POA can give an agent broad or limited authority over financial and property matters. Depending on how the document is structured, the agent may be able to act if the person becomes incapacitated.
This can matter after an accident, illness or other event leaves someone unable to manage bills, accounts or other financial affairs. Without appropriate planning, family members may need to seek a court-appointed guardian or conservator.
3. A health care power of attorney can address medical decisions
A health care POA lets an individual designate a trusted person to make medical decisions if they can no longer make them independently. Wisconsin’s Department of Health Services encourages adults over 18 to consider this document because it can apply to health care decisions beyond end-of-life treatment.
Wisconsin also recognizes a living will, which can state preferences concerning life-sustaining treatment in certain circumstances. A health care POA and living will serve different purposes, so an estate plan may include one or both depending on a person’s wishes.
Estate planning is not only for the wealthy
A person does not need a large estate to benefit from thinking ahead. A will can address property after death, while financial and health care powers of attorney can address important decisions during life.
Wisconsin provides statutory forms for some estate planning documents, but choosing and completing a form does not necessarily address every issue a person may face. An attorney can help identify which documents may be appropriate, explain how they work together and account for circumstances such as blended families, minor children, property ownership or beneficiary designations. Legal advice can also help when major life changes affect an existing estate plan, including marriage, divorce, the birth of a child or a significant change in finances.
