A basic estate plan, typically, includes a will, a designation for the executor of the estate, an advance healthcare directive and a power of attorney. A will is a legal document that outlines the will maker’s, or testator’s, last wishes and beneficiaries of their estate. An executor of the estate helps handle the estate distribution and validates the will. An advance healthcare directive explains the kind of care that the creator consents to – and does not consent to – if they are ever incapacitated.
A power of attorney is an agent who represents a testator if/when they’re incapacitated. The testator may be considered incapacitated if they’ve developed a debilitating medical disease, a severe mental illness or suffered traumatic injuries in an accident, for example. In other words, while a will and executor determine what happens after the testator passes away, a power of attorney handles matters while the testator is still alive but cannot make legal, medical and financial decisions for themselves.
There are several different kinds of power of attorney. As you’ll learn, many people have financial and/or medical powers of attorney. However, a testator can also choose between a durable, springing and general power of attorney. Here’s what you should know:
Financial power of attorney
A financial power of attorney handles any decisions on the behalf of the testator that might affect their assets. They may have to represent the testator to pay bills, loans, mortgages and debt and file taxes. In some cases, a financial power of attorney may be responsible for selling or renting a property.
Medical power of attorney
A medical power of attorney is very similar to its financial counterpart. They handle any decisions that might affect the testator’s health. That may include the testator’s prescribed medication, physical therapy sessions or whether they undergo surgery.
General power of attorney
Many testators believe that one person should be responsible for both financial and medical decisions. If this is the case, they may designate a general power of attorney. A general power of attorney may even handle legal and business matters on behalf of the testator.
Durable power of attorney
A power of attorney is either durable or non-durable. A durable power of attorney acts once a testator is incapacitated. While a non-durable power of attorney loses their role if the testator is incapacitated.
Springing power of attorney
Finally, a power of attorney who has a springing role is granted their position right away. This is beneficial for people who want to use their power of attorney for business and financial decisions, as they will be of great consequence should something ever happen to you.
If you’re making an estate plan, then you should be aware of all of your legal options, as they will be of great consequence should something ever happen to you.