Executing an estate plan, especially if you’re an adult child who is assisting an elderly parent in the task, can be a complex matter. While some Illinois estate owners might want to keep things as simple as possible, others have a high net worth, multiple investments, retirement benefits and other issues that factor into their asset protection plan. One of the most common types of estate planning documents is a power of attorney.
There are several types of legal documents that come under this category. When you’re drafting an estate plan, you might incorporate more than one power of attorney, for various reasons. It’s important to understand each type and to choose carefully if you plan to designate someone in this capacity.
Do you need a health care power of attorney?
If you suffer a medical emergency or develop a chronic or terminal illness, there may come a time when you are no longer able to act on your own behalf to make health care decisions, especially those that are relevant to end-of-life care. By signing a health care power of attorney, you can designate a proxy to act on your behalf. It’s a good idea to discuss your wishes with the person you plan to grant decision-making authority to as part of your estate plan; it’s also wise to include detailed written instructions in a living will.
The same person or someone different may have financial power of attorney
If you’re incapacitated and no longer able to make decisions on your own behalf, it’s not only your health that is a primary concern but your finances, as well. Another type of power of attorney grants a designated individual the power to make financial decisions on behalf of the principal or person who signed the power of attorney. You would, of course, want to choose someone who is trustworthy and astute at handling financial issues.
Limited power of attorney versus general power of attorney
It may be that you want a particular person to make certain decisions on your behalf but not others. In this case, signing a limited power of attorney might be the best option. You can specify exactly what types of situations or issues you want the person to handle.
A general power of attorney, on the other hand, grants a person the authority to make decisions on any matter permitted by state law. Such matters might include selling property, handling tax issues or managing bank accounts or assets.
Explore all options before determining a best course of action
You’ll want to learn as much as you can about each type of power of attorney before deciding which documents you wish to include in your estate plan. It’s helpful to discuss your estate planning goals with someone who has experience in handling the legalities of such matters. It’s also best to periodically review your estate plan to determine whether any additions, deletions or revisions are necessary.