Part 1 of Estate Planning Essentials outlines why your estate plan should include a will, a letter of intent, and perhaps even a trust.
In Part 2 of Estate Planning Essentials, learn why you should have a Power of Attorney and Health Care Power of Attorney.
As a reminder, estate planning packages may vary depending on state law. Consult with an attorney who specializes in estate planning or elder law to assist with executing documents that address your situation.
According to Investopedia, every estate plan should have these six documents:
- Will or trust
- Letter of intent
- Durable power of attorney
- Health care power of attorney
- Beneficiary designations
- Guardianship designations
In this three-part series, we highlight each document, explain what it covers, and include resources where you can learn more about why you might need this legal document.
Part 2: Durable Power of Attorney and Health Care Power of Attorney.
Durable Power of Attorney
First, let's define a general power of attorney (POA) – a legal document designating an agent to make decisions on your behalf. These could include legal, financial, and health care decisions. The agent may be a trusted friend or family member, or a paid attorney who specializes in these services. Perhaps you are not going to be available for some time and need someone to act on your behalf – that's one reason you may need a general POA. Spell out exactly which types of decisions the agent can make. Work with an experienced estate planning or elder attorney, who can help write a document that covers a broad range of possibilities.
A general POA ends when you become incapacitated, so don't think that assigning a power of attorney takes away your decision-making abilities.
A POA becomes "durable" when it's a specific POA. It stipulates that the agent will continue to make decisions on your behalf if you become incapacitated; in other words, it is in effect for an extended time.
I underlined if you become incapacitated because executing a durable POA does not automatically mean someone starts making all of your decisions for you. What it means is that if you become disabled and are unable to make these types of decisions, the agent you have designated can step in on your behalf.
As you can see from these definitions, it's crucial to execute your durable POA while you are of sound mind and decision-making capabilities. Failure to designate an agent to act on your behalf can leave such decisions up to judges and the courts. Such a direction takes time to execute, and positions your family to try to fight for a say-so in decisions about your circumstances, should that be your wish.
Once you have executed a durable POA and the courts have authorized it, it remains in effect until you revoke it or you die. Review your durable POA each year to ensure it continues to reflect your wishes. You must be of sound mind to revoked and execute a new durable POA.
Health Care Power of Attorney vs. Living Will
A health care POA is a specialized power of attorney that limits the decisions made by your agent to health care decisions if you cannot make or communicate them yourself. It does not authorize the designee to distribute your property after your death.
Choose a trustworthy friend or family member for this role. Your end of life decisions may conflict with what family members would choose. Your agent must be able to withstand the criticism and pressure brought by distraught family members.
You can revoke your health care POA as long as you are of sound mind. You can issue a new health care POA or end the current one. Contact your "attorney-in-fact,” the person you have authorized to make your decisions, to advise them of your wishes.
A living will, on the other hand, is a written document describing your wishes regarding medical treatment if you are unable to make those decisions yourself. It does not designate who should make those decisions for you. You must have a legal POA for that. According to Legalzoom.com, a living will also only applies if you are terminally ill, permanently unconscious or similar condition, as defined by the laws of your state. In some cases, if you are temporarily unable to make health care decisions, a living will is of no use.
Together, a health care POA and living will make your wishes known and designate the person you want to carry out those decisions if you cannot.
To learn more about estate planning, check out the entire series:
Part 1: Wills, Trusts and Letter of Intent
Part 2: Durable Power of Attorney and Healthcare Power of Attorney
Part 3: Beneficiary and Guardian Designations and other considerations
Note: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are solely for the convenience of the reader, user or browser; Living Well Stores does not recommend or endorse the contents of the third-party sites. Contact an attorney if you require legal advice.
