Sometimes, estate planning is thought of as simply drafting a will that outlines the testator’s final wishes. In truth, a will is just one of many estate planning documents.
When drafting your estate plan, something you may want to consider is a power of attorney. This is a document that hands over the power to a person of your choosing to make important decisions on your behalf.
There are two key types of powers of attorney. One relates to financial matters and the other to healthcare decisions. The distinctions between these are outlined in further detail below.
Financial power of attorney
There may come a time when an individual is no longer able to manage their own financial and business affairs. Drafting a financial power of attorney document allows a responsible person to make the big financial decisions instead. This can relate to business matters, tax affairs, Social Security and much more.
Financial power of attorney documents can give full financial control to the nominated party or they can be limited. For instance, a person may only need assistance with the financial side of their business, so the power of attorney only hands over control for this area.
Healthcare power of attorney
As the name suggests, a Healthcare power of attorney is a document that allows the nominated party to make medical decisions on a person’s behalf should they become incapacitated.
For instance, the power of attorney can make clear the types of medical treatment that the individual does and does not want. To give one example, if the individual held certain religious beliefs then some types of medicine may not be suitable.
Estate planning can be complex but it is a worthwhile endeavor. One of the best ways to ensure that your final wishes are honored is to seek some legal guidance when planning for the future.