Taking the time to create your estate documents may protect your interest as much while you are alive as they will after your death. No matter your age, in addition to a will, you need two additional documents: (1) advance medical directives and (2) a durable power of attorney. These may prove invaluable during your lifetime.
First, your advance medical directives are just that –your instructions about your health care. They typically include a living will and a durable medical power of attorney. Your living will outlines your medical care preferences at the end of your life. For example, if you wish to decline invasive medical interventions that will serve to prolong the dying process, you can state your wishes to withhold such extraordinary medical intervention in your living will.
Whereas a living will states your medical instructions for the end of your life, in your durable medical power of attorney you choose an individual (in legalese, an “agent,” or “attorney-in-fact”) who can make medical decisions on your behalf. Your agent will have the right to access your medical information, sign medical waivers, and employ healthcare providers on your behalf.
Second, a durable general power of attorney is a powerful document in which you name an individual (or individuals) who may conduct business on your behalf. For example, if you were injured in an accident and suffered a significant physical injury, your agent could step in and help you manage your finances and your property. Or, perhaps you suffered a mental illness or were simply traveling and needed someone to stand in for you. In all of these cases, the person you name as your agent is legally empowered to transact business on your behalf. For example, your agent could pay your bills, forward your mail, manage your investments, and/or sign your tax return.
Legally, the person you name as your agent is required to act as a “fiduciary,” which means he or she must make decisions in your best interest. Clearly, the person you choose to serve on your behalf must be someone you trust.
Read the rest of the series on Estate Planning Mistakes to Avoid:
Mistake #1: Not Having an Estate Plan
Mistake #3: Failing to Name Beneficiaries on Retirement Accounts and Insurance Policies
Mistake #4: Creating Multiple Probate Estates
Mistake #5: Giving Gifts to the Wrong Beneficiaries
Mistake #6: Failing to Implement the Estate Plan
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Photo of Zie Matilde e mia madre, by Enrico, used under Flickr Creative Commons license.