Although many estate planning documents address what you would like to happen after you pass away, some documents, like powers of attorney, address what you would like to happen if you are alive but have become incapacitated. There are two types of powers of attorney to consider based on the needs of your situation. These include a power of attorney for healthcare and a power of attorney for property.
Power of attorney for healthcare
A power of attorney for healthcare is a document that allows you to choose someone to make healthcare decisions on your behalf if you are incapacitated. This person is called your healthcare agent, and many people choose a trusted family member or friend for this role.
Some of the responsibilities your healthcare agent could have include:
- Talking with health care providers about your health
- Viewing your medical records and deciding if others should also view them
- Giving permission for tests and treatments
- Selecting where you receive care and who provides that care
- Giving permission to accept, withdraw or decline life-sustaining treatments under certain circumstances
- Decide what should happen to your remains after you die, unless you have already made plans
Power of attorney for property
A power of attorney for property is a document that allows you to choose someone to manage your property and finances on your behalf. This alternate decision-maker is called your agent, and because your agent is tasked with managing your finances, it is important to choose someone you trust. Often people choose a close family member or friend, but it can also be helpful to choose someone who manages his or her own personal finances with care.
Some of the powers you can give your agent include the ability to:
- Manage or sell your real estate
- Complete banking transactions
- Pay your bills
- Invest on your behalf
- Hire someone to represent you
Although it is a personal decision to create powers of attorney or not, it can help prevent a loved one being forced to seek guardianship to gain the ability to make healthcare decisions or manage your finances while you are incapacitated. The guardianship process can be time-consuming and expensive, which can cause a delay before important decisions can be made on your behalf.
Although most people choose to have both types of power of attorney, both are not required. You also do not have to choose the same person as both agents. However, it can be helpful to choose agents who get along.
Estate plans often include more than wills and trusts. Powers of attorney can be beneficial estate planning tools to protect your interests while you are incapacitated and protect your loved ones from the costs associated with the guardianship process.