Most people automatically think about the will and trusts when they’re discussing estate plans. There’s another important component that must be taken care of – power of attorney designations.
The power of attorney designations help to ensure your affairs are taken care of if you become incapacitated.
#1: Types of power of attorney
There are two primary power of attorney designations that are used. One is the power of attorney for health care. This individual makes medical decisions for you, but they can’t make decisions that go against the wishes you have in your advanced directives. They work closely with your medical care team.
The other type of power of attorney is for your finances. This person can pay your bills, purchase or sell assets, and do anything with your finances that you’d normally do. They should be aware of what bills you have and understand your thoughts on all things related to your money and assets.
#2: Choose the right person
You can have the same person to take care of both types of power of attorney, but you don’t have to. You need someone who can make decisions that are in your best interests. They can’t think of their own wishes or what might make life easier for them. They must always act ethically. It might behoove you to discuss your wishes with them so they have the basis for what you’d do.
#3: Power ends when you pass away
The person who has power of attorney can’t make decisions on your behalf after you pass away. Your estate will take over financial matters and there’s no longer a need for medical decisions. Some people name the individual who has the financial power of attorney as their estate administrator to ease the transition.
Your estate plan must reflect your wishes. While the power of attorney isn’t something that your loved ones will need after your death, it’s still an important part of your estate plan. Working with someone who knows your needs and can help you to get everything set up is crucial.