When creating an estate plan, most people focus on wills and trusts, assuming these are the only documents needed to secure their wishes. However, adding powers of attorney (POA) to your estate plan may be just as important, as they can offer protection for your financial and medical decisions if you are ever unable to make them yourself.
A power of attorney is a legal document that authorizes a trusted person to act on your behalf. The two most common purposes of a POA are granting someone authority over your financial decisions and granting someone authority over your healthcare decisions. If you are in the estate planning process, you need to understand how powers of attorney operate and how creating one or multiple may help you with your goals.
Financial power of attorney
A financial power of attorney can allow you to appoint someone (a trusted agent) to make financial decisions for you if you become incapacitated. Your trusted agent may need to make decisions about paying bills, managing investments, handling real estate transactions, or even filing taxes. Without a financial POA, a family member may have to go through the lengthy and costly process of seeking a court-appointed guardian or conservator to take control of your finances.
Health care power of attorney
A healthcare POA designates an individual to make medical decisions for you if you are unable to communicate or make decisions yourself. This is particularly important in situations involving serious illness or injury. The person you choose should be someone you trust deeply to understand your wishes and advocate for the kind of care you want. Having a medical POA can also help prevent confusion or disputes among family members about the course of your treatment.
Without these important documents in place, you may find your loved ones in a difficult and stressful position, unable to make decisions on your behalf. Adding powers of attorney to your estate plan can help ensure that your financial and healthcare matters will be handled according to your wishes, even if you are unable to manage them yourself. By seeking legal guidance during your estate planning process, you can help make sure that your POAs are correctly drafted, legally valid and securely in place to protect your future.