In addition to creating a will or trust, there are two important documents a person may want to consider completing. A financial power of attorney and a healthcare power of attorney can be useful additions to an estate plan.
Financial power of attorney
A financial power of attorney allows a person, called the principal, to designate another person, called an agent, to make financial decisions on the principal’s behalf. It must be in writing.
It’s important to choose a trusted person to act as the agent. His or her responsibilities may include paying bills for the principal, acting for the principal in real estate matters and handling other financial transactions.
Most often, a financial power of attorney is intended to be in place for a long time but in other situations, it may be executed for a specific purpose only. The document should be reviewed periodically to ensure that it still meets the principal’s needs.
Healthcare power of attorney
A healthcare power of attorney allows an agent to make healthcare decisions for the principal when he or she is unable to do so. It may include decisions about treatment, managing the principal’s medical records and end of life care.
These decisions can be difficult for the agent to make, so just like with a financial power of attorney, it’s important to choose someone trustworthy and who will carry out the principal’s wishes. The principal may also want to designate an alternate agent who can act if the first agent is unable or unwilling to do so.
Power of attorney documents can be a useful part of an estate plan. An experienced estate planning attorney can provide guidance.