Three Legal Documents that Most People Should Have

America is a melting pot in its truest sense. People from different countries and background migrate and settle down here. Most immigrants adapt to the American lifestyle and culture well.  However, there are certain things that newcomers may not fully understand - preparing for the unexpected and death is among one of them. To prepare for the uncertain future, three legal documents are critical: a will, a power of attorney and a living will.

Will
A will ensures an orderly disposition of one's assets upon death according to her wishes. Dying without a will means that the person's property is distributed according to the state law rather than her wishes.  A will is an important estate planning tool but it is not only for the rich. Most middle class families require some form of estate planning.  For example, in New Jersey, an estate tax return must be filed if the decedent's gross estate exceeds $675,000, a threshold that can easily be reached with the ever increasing real estate values and also life insurance proceeds. Another overlooked scenario is when a person died in an accident, the value of the person's estate could be increased significantly by monetary compensation.  Without a will, a court will appoint an administrator to oversee the distribute the estate, and a bond must also be posted.

Another important function of a will is to ensure that one's children will be properly cared for if both parents pass away. It is not uncommon for both parents who die in a common accident together.  Without a will, a state family court will take over custody of the minor children after the passing of both parents.  An legal guardian will be appointed to care for the children.  This person may not share the same beliefs, religious and otherwise, as the parents in how to raise the children.  This problem can be avoided with a properly drafted will.

Power of Attorney
When young and healthy, most people don't think about what would happen when they became very sick or disabled.  Who would pay their bills?  Who would handle their assets and regular business transactions?  A power of attorney allows one's spouse, significant other, or another pre-determined person to handle one's assets and affairs when he becomes disabled to do so.  A power of attorney is a written legal authorization to allow another person to handle your business and financial transactions upon disability.  You may give authorization to this person immediately or when you become disable.  You can grant broad general powers or specific authorizations to this person.  You can also cancel a power of attorney at any time without reason. 

Living Will
Despite its name, a "living will" has nothing to do with a will.  A living will is a document that serves one main purpose - to let doctors and other medical professionals know your wishes in terms of medical treatment and other health care matters when you become unable to communicate your wishes due to a medical condition.  One example is when a person becomes a "vegetable" in the hospital due to brain damage, should life-prolonging treatment be withheld or provided?  A living will, also known as "healthcare directive",  that was properly drafted and executed when the person was mentally fit provides specific instructions to the physicians on critical medical decisions like this one.  A person with religious belief can also use a healthcare directive to make sure that healthcare will be provided according to the tenets of his religion.  For example, the Catholic church provides specific healthcare directives for Catholics to follow.  

A living will may also be used as a medical power of attorney or "health proxy".  Like a power of attorney, a health proxy pre-assigns another person, usually a family member, to make medical and healthcare decisions on your behalf when you are not able to.  It is not possible for a person to put down all their medical wishes beforehand in writing. By sharing your beliefs with a family member, and giving legal power to this person to act as your medical power of attorney, you can be sure that your  medical wishes are followed.