There are several important estate planning tools, but perhaps none more essential to peace of mind than financial powers of attorney and advance directives or medical proxies.
Both documents can go into effect during your lifetime. They represent thoughtful planning on your part, and comfort for your family in the event either power is ever required.
The financial POA
If you should become incapacitated and unable to handle your financial affairs, you can appoint someone you trust to manage them for you through a financial power of attorney. In fact, you can name more than one person if you feel people with separate abilities and qualities would prove beneficial. Whoever you name could take on various tasks: pay your bills, access your retirement plans, sign an income tax return on your behalf, protect your assets if you enter a nursing home and even sell your house, if necessary.
The advance directive
You can also name someone to make healthcare decisions on your behalf. You could become incapacitated due any number of issues: a stroke, injuries from a vehicle crash, the onset of dementia and more. In addition to naming someone as your agent, an advance directive/medical proxy can include your instructions as to whether doctors should take you off life support if you are terminally ill.
Powers of attorney have two forms: durable and springing. A durable power of attorney goes into effect immediately upon signing. The person you name as your agent then has the legal authority to act on your behalf. He or she will retain that authority even if you never become incapacitated. However, with a springing power of attorney, your agent will not have the legal authority to act on your behalf until you become incapacitated. In drawing up a springing power of attorney, you must be especially careful to state the condition that will activate this POA.
No one can predict what will happen. No matter which kind suits your particular circumstances, preparing financial and healthcare powers of attorney represents the sort of thoughtful planning that will provide you and your family with peace of mind.