Financial Power of Attorney and an Advanced Directive for Health Care are Important Parts of Your Estate Plan (Part 1)
By now everyone should know that they need a Will, but just having a Will is not enough for a complete estate plan. Estate plans are about making sure your wishes are honored, during life and after your death. A Will sets forth your wishes for what occurs after your death, but doesn’t address your wishes during your life. A Power of Attorney and an Advance Directive for Health Care both work to ensure your wishes during life are honored.
We all know that a Will allows you to direct where your property will go after your death, but a Will also allows you to name the persons who will be in charge of handling your estate and taking care of any minor children you might leave behind. Essentially, it allows you to name people who you trust to make the decisions you would have made if you were still alive and able to do so.
In comparison, a Power of Attorney and an Advance Directive for Health Care allow you to name people who you trust to make decisions for you and on your behalf during your life if you become physically or mentally incapable of making such decisions for yourself. Because your Will only deals with things that happen after your death, it does not help in these sort of situations.
The Power of Attorney is commonly referred to as a Financial Power of Attorney or Durable Power of Attorney.
A Power of Attorney allows you to delegate authority to your named Agent or attorney-in-fact, so that they can act on your behalf. This document is normally focused on giving authority for someone to manage your assets and financial matters for you.
How much authority is granted depends on the specific language of the Power of Attorney. It could be broad or limited to specific acts.
For example, if you can no longer live at home and need assisted living, the Power of Attorney could give your attorney-in-fact the authority to sell your home to pay for your care.
A Power of Attorney may be used to give the attorney-in-fact the right to sell a car or property, gives access to bank accounts, handle financial transactions, sign legal documents for you, and even make gifts on your behalf, among other things.
The Advance Directive legally allows health care decisions to be made for you by the person you name as your Health Care Agent should you be mentally or physically unable to communicate your preferences or make those decisions at that time. This includes situations where you are simply unconscious for a short period of time, such as when a car accident victim is first brought into the hospital.
It also provides instructions to your Health Care Agent about your preferences for care and treatment to help guide them in making their decisions.
In addition, the Advance Directive for Health Care allows you to give directions about whether to withhold or limit life-sustaining medical treatment in certain situations in order to maintain dignity and alleviate unnecessary pain and suffering.
Estate Planning & Administration