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We don't like to think
about it, but what if life throws us a curveball
that we're unable to catch? Who will step
in to take care of our stuff -- pay our bills
or make decisions about our health care --
if we're unable to do these things? You can
plan for these contingencies by completing
special documents with an estate planning
attorney.
Powers of attorney: a financial backup plan
A power of attorney is a document that allows
someone you choose to manage your financial
affairs, such as bill paying and investment
decisions, if you become unable to do so.
You may want to relinquish control only under certain circumstances.
Powers of attorney are relatively inexpensive to create. If you designate a family member or close friend as your agent, there may not be a fee. But if, for example, you name a bank or attorney, you will be charged either at an hourly rate or a percentage of your assets annually. Make sure the agent you choose is willing, trustworthy and competent to handle your finances.
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| Two common types of powers of attorney |
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With
a "durable
power of attorney," you name
another person to act in your place
according to terms you set. These
terms can be narrow or broad, time-limited
or ongoing. |
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A "springing
power of attorney," on the
other hand, only becomes operative
under the circumstances delineated
in the document. The most common
circumstance is incompetence. With
a springing power, the agent will
have to prove your incapacity (letters
from doctors, etc.) before being
able to act on your behalf. |
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Health care planning
Health planning is every bit as important as wealth planning. Executing one or more of these documents in advance spares your loved ones the anguish of having to make these kinds of decisions for you.
The broad category of health care documents is often called "advance medical directives." Within this category are the following documents:
- Medical powers of attorney. These instruments authorize one or more representatives to make health care decisions for you if you are not capable as determined by your doctors. It can provide narrow or broad directions for your agent to follow.
- Health care proxies. This is a brief declaration naming another to provide informed consent concerning your medical treatment if you cannot provide it yourself.
- Living wills. This document declares your wishes regarding medical intervention if you become terminally ill or are in a persistent vegetative state. In most situations, living wills state that the patient does not wish to prolong the dying process by artificial, mechanical means.
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