A well drafted estate plan gives the owner a unique peace of mind as they make their way through life. The plan holder knows that they will not leave any questions for their friends and family regarding their affairs, their wishes and their assets. Trusts and wills are generally two of the first things individuals think of when they consider estate planning, but powers of attorney are equally as important.
In an earlier blog we discussed the value of health care directives in an estate plan. Here we will go over how power of attorney ties into that matter, though it does not have to, and how power of attorney can be used to manage your financial affairs.
Health care power of attorney
Granting another individual health care power of attorney over you is a type of health care directive. As we explained last summer, when a medical professional certifies in writing that you can no longer make medical decisions for yourself, the person you named as your health care proxy receives the power to make medical decisions on your behalf.
Your healthcare proxy is allowed all the same information you would have access too, including medical records. They will be able to seek second opinions, direct your treatments and grant or deny resuscitation orders.
It is important to note that this differs from a living will. While also a health care directive, a living will is a document which clearly states in writing what you wish to be done should you become incapacitated. Some may see the lack of a human’s decision making as a liability, though it may also be a better option if you prefer to keep your affairs to yourself.
Financial power of attorney
This form of power of attorney allows you to designate someone else, called your “agent”, to act upon your property with the same power you do. You have the option to grant as much or as little power to your agent as you wish. For example, you may limit them solely to being able to open a bank account in your name, or you may give them full power over your entire estate.
It is important to understand that your agent’s financial power of attorney ends should you become incapacitated. For your agent to retain their power after you are incapacitated, you will need to grant them “durable” power of attorney. Who you designate as your agent is at your discretion, but it should be someone with your best interests in mind.
Matters regarding an individual’s estate can quickly become complicated, that is why it is vital to work with a professional every step of the way as you make your estate plan.