There are many different documents that people can add to an estate plan. Most people are familiar with wills which allow individuals to name specific beneficiaries to receive their assets, assign someone the role of guardian and nominate someone to act as their personal representative after they die.
People may also be vaguely familiar with several other kinds of estate planning documents, such as powers of attorney. Many people have heard of powers of attorney but may not truly understand what these documents do and how to determine if they need to add them to their estate plans.
The purpose of powers of attorney
The function performed by powers of attorney is made clear by the name. The document serves to transfer authority to another person in specific circumstances. Powers of attorney allow individuals to appoint an agent or attorney-in-fact to handle medical or financial matters when they become incapacitated.
Powers of attorney take effect while people are still alive but unable to communicate or act in their own best interests. Those experiencing temporary incapacity or permanent incapacitation can derive protection from powers of attorney. Someone else can oversee their medical treatment and manage their finances.
Who needs powers of attorney?
In theory, almost anyone over the age of 18 might benefit from powers of attorney. New adults and young professionals may not yet have spouses or children. However, their parents can no longer access their finances or medical records. Powers of attorney provide support and protection for those who do not have immediate family members to act on their behalf.
Even after getting married, many people want to maintain powers of attorney so that they can protect their spouses from the pressure of managing all of their affairs in an emergency. Those with pressing medical issues and those preparing for retirement may also benefit from drafting powers of attorney.
They may want to consider creating durable powers of attorney that can continue protecting them even if they become permanently incapacitated. People may also want to consider drafting advance directives. These documents describe an individual’s medical preferences so that the agent or attorney-in-fact overseeing their treatment knows what they prefer.
Creating a robust estate plan that addresses medical emergencies in addition to the realities of dying is often a smart idea. Powers of attorney and advance directives can be very useful for people in a variety of different circumstances.