Everyone Needs an Estate Plan
Estate plans are not just for the wealthy. A good estate plan consists of more than just a will and trust. It also includes powers of attorney, advance healthcare directives, and possibly a pet trust or disposition of remains. What are these documents and why do you need them? I’m glad you asked! For the next four weeks, I will be posting information on a different document I recommend including in every estate plan. This week’s post covers powers of attorney.
Power of Attorney
What is a power of attorney? Power of attorney is a legal document that allows a person of your choosing to “step into” your shoes and make decisions for you as if they ARE you. The person you choose is an agent, oftentimes called an attorney-in-fact. Your agent may have general power of attorney or durable power of attorney. General powers of attorney are in effect until you revoke them, or become incapacitated. A durable power of attorney remains in effect even if you become incapacitated. These powers can begin at a time of your choosing. They can go into effect immediately upon signing, or “spring” into being upon your incapacity.
A power of attorney for healthcare decisions allows your agent to make medical decisions for you. A financial power of attorney allows your agent to manage your financial affairs for you. These powers can be broad or as limited as you make them. Why does everyone need to include these in their estate plan? Because most of us will become incapacitated before we die. You may remain in this state for a period of time, and without powers of attorney, your family can experience difficulty in tending to your everyday responsibilities for you. They might need access and authority to withdraw money from your bank accounts to pay bills. Often, they will be called upon to make decisions about your medical care that you haven’t thought to discuss with them, or put into an advanced healthcare directive.
Who should you appoint as your agent? That depends. It is important that the person you choose be someone you are comfortable discussing the intimate details of your finances and healthcare with. For most of us, appointing a family member makes the most sense. If you want to appoint more than one family member to be your agent, it is important to specify how they must reach decisions. May they act alone, or must they act together? Must there be complete agreement? There are no correct answers. Estate planning is not a one-size-fits all endeavor.
Have questions? Set up a free consultation by scrolling down and using the contact form below! Next week’s top is advanced directives.