Estate Planning - Power of Attorney

Durable power of attorney and a healthcare directive are another two more documents that you need for your estate planning.

There are two more documents that should become part of your estate-planning tool kit. Both allow you to choose individuals who will be able to make decisions for you and act on your behalf should you become incapacitated. These may entail medical, legal, or financial decisions. These documents are not just for elderly parents; they are for anyone over 18. They are a durable power of attorney and a healthcare directive.

Durable Power of Attorney

A durable power of attorney allows you to name someone to act as your attorney-in-fact, sometimes referred to as your agent, if you are unable to do so. This person is then authorized to manage your affairs if you are absent, ill, of become incompetent. Choose your attorney-in-fact carefully. You should trust the person completely.

If you should become incapacitated and do not have a durable power of attorney, a guardian would need to be appointed by the courts to handle your affairs. This applies even if you are married. The healthy spouse would have to ask the courts for the authority to manage your affairs. The decision as to who will be named is the judge's. The judge may or may not appoint the spouse. The healthy spouse cannot sell, mortgage, or transfer your interest of any property if you are incapacitated. A guardian is limited in power and must report to the courts at least annually. Guardianship is also costly; in most states, it costs an average of $3,000.

Durable powers of attorney are powerful legal instruments that allow someone access to you money and assets. Choose carefully! The person to whom you give the power will be managing your money for you. Can you trust this person, and just as important, is he or she capable of handling your affairs?