Estate plans typically include a will that itemizes a testator’s assets and a list of people who will inherit them. A will may also name an executor of the estate, who will perform all the necessary actions of preparing the estate for distribution, such as validating the will, securing precious assets and paying the testator’s taxes. In some cases, estate plans even include naming a child guardian to take over the responsibility of caring for the testator’s children until they’re old enough to care for themselves.
Your first impression of an estate plan may be that it’s an arrangement in preparation only for your passing. While that’s not entirely wrong, there is one important factor during lifetime that people often overlook; many people include a power of attorney in their estate plan.
Sometimes, you may need someone else to step into your shoes
Simply put, a power of attorney is someone you name as an agent to make decisions on your behalf while you are alive. Most powers of attorney agents only come into their role if you, the principal, are considered incapacitated. You could be considered incapacitated, for example, if you’ve suffered life-threatening injuries in an accident and become unconscious or if you’ve developed a mental condition that leaves you mentally unresponsive or unaware of others’ presence.
There are two primary types. The person with your medical power of attorney may make decisions over your medical health, such as approved medicine, therapy or surgery. Meanwhile, your financial power of attorney can decide how your money and assets are handled, pay your bills and even sell property for you. Many people designate the same person in both roles, but you can split it and designate two people.
You may want to understand your legal rights when naming a power of attorney and how they can be used. These powerful tools are too important to leave out of your estate plans.