Many people are aware that estate planning may include completing a will or trust, but sometimes overlook the usefulness of a power of attorney.
A power of attorney for finances and a power of attorney for healthcare allow a person to designate someone to act on their behalf. The person who creates a power of attorney is called the principal and the person he or she appoints to act is called an agent.
A power of attorney for finances allows the agent to make financial decisions for the principal, which may include managing the principal’s money. It can also include acting on behalf of the principal for insurance and tax matters, claims and other transactions.
The principal can choose which powers to grant the agent and the agent must act in accordance with the powers allowed by the principal.
Unless it states otherwise, it will apply throughout the principal’s lifetime.
A power of attorney for healthcare allows the agent to make healthcare decisions for the principal. These powers may include deciding to accept or decline medical treatment, admitting the principal to a hospital and accessing and disclosing medical records.
The principal can authorize the agent to make healthcare decisions immediately or when he or she is no longer able to do so, as determined by the physicians involved in the principal’s care. It can also address the principal’s wishes about life-sustaining treatments.
Along with preparing an estate plan, an experienced attorney can explain the requirements of each type of power of attorney. They are a useful planning tool to consider.