Estate planning encompasses a variety of factors. Much of it depends upon having the right documents filled out correctly and keeping them updated with the latest information.
Two vital documents smooth out the process of estate panning and administration.
Power of attorney
Forbes describes a power of attorney as a powerful document that people often overlook in their estate planning process. It is crucial that individuals understand what a power of attorney accomplishes. Individuals should know that the document holds significant power, including:
- Naming an agent to make financial decisions
- Giving the agent control over bank accounts, trusts and other assets
- Remaining in effect until expressly canceled or upon death
Deciding who will have the power of attorney is a critical decision. While the agent does have a fiduciary duty to act in the best interests of the primary, a dishonest agent could create stress and difficulty. In the case of stolen assets, the primary recourse would likely require court action.
Health care proxy
The American Bar Association states that a health care proxy is also called a durable medical power of attorney. Its main purpose is to appoint a person to make medical decisions for someone experiencing temporary or permanent incapacity. Some important facts about a health care proxy include:
- The power for medical decisions usually resides in one agent.
- A designated alternate can make decisions if the primary agent is unavailable.
- The agent should agree to carry out the wishes of the patient.
Both a power of attorney and a health care proxy provide peace of mind for individuals. They become vital in old age and during medical emergencies.