In your estate plan, you’ll work out many crucial details to ensure your assets are given a new home after you pass away. Of course, you’ll itemize your assets, plan your funeral arrangements and designate an executor of the estate – all of which prepare for what happens after you die – but, you should also prepare to designate a power of attorney.
If you’re making an estate plan, then you should understand what a power of attorney is for. Here’s what you should know:
What is a power of attorney?
A power of attorney is a representative that you designate in your estate plan. This representative or agent makes decisions on your behalf. They don’t initially make decisions once designated, instead, you have to be in a state of physical and mental limitations that prohibits you from making decisions for yourself. In other words, a power of attorney typically only comes into play if you develop a mental illness, suffer a catastrophic injury or become incapacitated, which would limit your ability to make decisions.
There are two kinds of power of attorney: financial and medical. A financial power of attorney handles debt, rent, utility payments, taxes and anything relating to money. A medical power of attorney would handle health decisions such as medication, surgery or therapy.
What makes a good power of attorney?
A power of attorney, as you may have guessed, is critical for your estate plan, health and finances. As such, you shouldn’t pick just anyone to be your power of attorney. There are some characteristics that people look for when picking their power of attorney, such as the following:
- ● Trustworthy: you may pick someone you know will make decisions you would otherwise make if you were of sound mind
- ● Responsible: you may want someone who you know won’t take advantage of your physical or mental state and fulfill their duty
- ● Understanding: you may pick someone who disagrees with what you think is in your best interests, yet, follows through with your wishes – even if it means going against their opinion
- You may have to go through several powers of attorney during your life. To ensure you’re making the right decision, you may need to understand your legal rights.
