When it comes to your estate plan, do you know which documents are the most crucial? You may have heard about powers of attorney, but the documents mean little to you if you do not understand what it means.
According to AARP, every person should have a power of attorney.
What is a power of attorney?
A power of attorney is a document where you name a person to act on your behalf. The person you name acts as an agent if you become incapacitated and cannot make decisions for yourself. If you do not plan, you may lose your voice and others have to make sense of your wishes. For example, if you become incapacitated, the court could choose someone to handle your finances and medical affairs. You cannot guarantee the person has your wishes in mind.
What are the types of power of attorney?
When it comes to powers of attorney, there are several documents you may have. For example, you may have the following:
- Durable powers of attorney
- General powers of attorney
- Specific powers of attorney
You can make a durable power of attorney limited or broad. The durable power of attorney may handle financial or legal affairs and, in some instances, both. For example, if you have a medical crisis, your family does not have to worry about assigning someone to control your financial or legal interests. In some cases, you may opt to include your medical decisions in the durable power of attorney for healthcare.
The difference between a general power of attorney and specific power of attorney is that a general power of attorney tends to be a broad document. In contrast, a specific power of attorney grants particular permissions to a person.