When many people think about estate planning, they automatically think about distributing their assets to their loved ones. That’s a cornerstone of estate planning, but there’s another concern to consider—plans for if you become incapacitated.
One thing you need to do is give someone the legal authority to make decisions on your behalf in the event that you can no longer articulate your wishes due to illness, injury or advanced age. This includes naming someone to make health care decisions and someone to make financial decisions. One person can handle both of these concerns or there can be someone different for each.
Naming someone to make medical decisions for you
A medical power of attorney (POA) allows you to appoint someone to make health care decisions on your behalf if you can’t do so. This person, often referred to as your healthcare agent or proxy, will have the authority to make medical decisions based on your wishes and best interests when you’re incapacitated.
The scope of decisions can range from routine medical care to critical life-saving interventions. Choosing someone who understands your values and desires concerning medical treatment and end-of-life care is essential.
Having a medical POA in place ensures that your healthcare preferences are respected and decisions are made by someone you trust. This is a better option than leaving these choices up to medical professionals or court-appointed guardians.
Choosing someone to make financial decisions for you
A financial power of attorney grants your agent the authority to handle your financial affairs. This can include paying bills, managing investments and making significant financial decisions on your behalf.
The financial POA can become effective immediately, allowing your agent to act in your stead for convenience, or it can be designed to become active only if you are incapacitated, known as a “springing” POA.
Selecting a trusted individual with financial savvy and an understanding of your financial goals and preferences is crucial. This ensures that your financial matters are handled according to your wishes, which reduces the burden on family members and avoids potential conflicts that might arise from not having a designated financial decision-maker.
Both medical and financial powers of attorney can play critical roles in managing your affairs during periods of incapacity. By carefully selecting your agents and specifying your wishes, you can better ensure that your health care and financial matters are in trusted hands, providing peace of mind to you and your loved ones.
