Estate planning often starts with a will. People decide they need to figure out what they’re going to do with their assets when they pass away. To avoid a dispute between their heirs, they draft a will that tells those heirs exactly who should get which assets.
This is a good start to an estate plan, but it may not be enough. Another important document to consider is a power of attorney.
How does this work?
There are multiple types of powers of attorney that you can use. The most common is either a medical or a financial power of attorney.
Either way, the goal of this document is to authorize someone else to make decisions in this area. For example, perhaps you are worried about becoming incapacitated as you grow older, but still needing medical care. You can’t talk to the doctors, but a power of attorney establishes which person should be your agent. They can work with your medical team to make those decisions.
Similarly, a financial power of attorney authorizes that agent to do many different things on your behalf, such as paying the taxes, paying the mortgage or removing money from a bank account. They may even need to take steps to pay for your medical care. Additionally, a power of attorney can be used to authorize them to make your legal decisions, which only you normally have the right to do.
As you can see, estate planning often goes far beyond a will. Make sure you know exactly what options you have and what steps to take.