The power of attorney is an essential part of estate planning. This document allows you to legally designate someone to act on your behalf and make decisions with your best interests in mind.
Medical vs. financial powers of attorney
Two types of powers of attorney people typically include in their estate planning are:
- Medical power of attorney: This is also known as a healthcare proxy. They are the person you choose to make any necessary healthcare-related decisions, such as hiring a nurse or personal care assistant, medical treatments and end-of-life care.
- Financial power of attorney: This allows you to name a person to oversee your finances. If you have a trust, they generally work with your trustee to manage your life insurance, retirement accounts and other assets not included in the trust.
Take note that while you may be able to change or revoke power of attorney documents, it can be more difficult to do so with a financial one.
Ideal to have both
There is no rule or requirement saying you can only have one power of attorney. In some cases, it may even be ideal to have both to better protect yourself and your estate. If you choose to do so, you will need to create two separate legal documents.
Appointing different people for each role
Many people name one person to have both medical and financial power of attorney. The spouse or adult child is often chosen to take on both responsibilities. However, you may also designate different people for each role to help lighten the load on each person.
Part of a complete estate plan
A power of attorney arrangement is only part of a complete estate plan. It works together with wills and trusts to safeguard not only your assets but also your health and well-being. Guidance from a legal professional is key to ensuring you have an effective plan in place that includes power of attorney. Working with the attorney can provide peace of mind, both for your future and those of your loved ones.