A lot of people think that estate planning is just the process of figuring out how your assets are going to be distributed once you pass away. While this is certainly a big portion of estate planning, it isn’t the entire process by any means. In fact, as you engage in the process you want to consider not only what will happen to your estate once you’re gone, but also what will happen to your estate if you suddenly become unable to make important decisions on your own.
What is a power of attorney?
A power of attorney is a document that gives another person the authority to act on your behalf should you become incapacitated or otherwise unable to make important decisions on your own. The amount of authority that you grant to the agent can span a spectrum, involving everything from financial and investment decisions to decisions regarding medical treatment.
The authority granted in the power of attorney doesn’t become valid until you become incapacitated. Keep in mind, though, that such incapacitation may be short in duration, or it could be for an extended period of time, as would be the case if you were placed in long-term care suffering from a mental health condition.
To ensure that the power of attorney remains in effect after incapacitation, you’ll need to make sure that it’s a durable power of attorney. This arrangement gives your agent the authority to make decisions on your behalf even if you fall into a coma or suffer from amnesia. Once you pass away, though, the power of attorney is extinguished, meaning that your named agent won’t have any power over your estate at that time.
Choosing your agent
Given the magnitude of the decisions that are made through a power of attorney, you need to make sure that you’re choosing someone you trust to act your behalf. This individual needs to understand your financial philosophies and your financial goals, as well as how you would want important medical decisions to be made.
Therefore, before creating a power of attorney, you should speak with those who you’re considering naming in the document. Only after those discussions should you name an individual in your power of attorney documentation.
Keep in mind, too, that you can always change the agent who is named in your power of attorney documents. That’s one reason why it’s important to revisit your estate plan periodically. After all, a changed relationship with that individual could impact how he or she makes decisions on your behalf, which may then render them against your best interests.
Fully consider your options before creating a power of attorney
Although a power of attorney can be a great way to ensure that your financial and healthcare interests are protected, it’s also a broad grant of authority. We know that can be a daunting thought, and it’s not a decision that you should make lightly. That’s why you should carefully consider what a power of attorney would mean for you in your circumstances before signing off on it.
Creating the thorough estate plan that you need
A power of attorney is just one piece of a holistic and comprehensive estate plan. If you want to make sure that you’re appropriately covering every part of your estate, then you might want to discuss the estate planning process with an attorney who is experienced in this area of the law. Hopefully, then you can rest assured that you, your estate, and your loved ones have the protection that you intend to provide.