This takes us into the other estate planning documents. Most, if not all, people know they need a will or a trust. Yet, estate planners always talk about the Estate Planning Portfolio. This article is a good source for what they are and why they are needed. The documents are:
- Durable Power of Attorney for Health Care
- Durable Power of Attorney for Finances
- Living will
Let me explain a few terms first. Durable means there is language in the document that states that the power of attorney is enforceable notwithstanding the person's eventual incapacity. This is a good clause. I cannot think when a power of attorney is most needed than when the person is no longer able to manage their affairs on their own. Also, Living Will is very often confused with Last Will & Testament and Living Trust. It is neither. I'll go into this below.
The article uses scary scenarios to drive home the point that you need these documents. I will concur that these scenarios are very real and happen way too often but I won't repeat the stories here. Here is the link to the article: http://articles.moneycentral.msn.com/RetirementandWills/PlanYourEstate/3legalPapersYouShouldntLiveWithout.aspx
Basically, the Durable Power of Attorney for Health Care allows your agent to make medical decisions on your behalf in lieu of your own decisions concerning your desires for specific medical procedures, such as surgery or other medical treatment (including the termination of life support systems), in the event you are unable to do so.
The Durable Power of Attorney over Assets (Financial) gives powers over your assets to the person you have named as agent therein. It is called a "springing power of attorney" in that it springs into effect when the contingency of incapacitation occurs (although you may elect to make it effective immediately). This power of attorney helps to avoid a court-ordered conservatorship over your assets in the event of your incapacitation. It also allows such person the authority to sign tax returns and other similar documents for you.
The Living Will sets forth your desires with regard to being kept alive or having your life prolonged by artificial means, when you have a terminal illness or are in a comatose state and all natural hope of your recovery has been exhausted. In the event that such a condition should happen to you, this instrument will serve to give notice that you desire not to be kept alive by such artificial means.
I cannot state how important these documents are. To be honest, I have greater fear of a client's incapacity without leaving a loved one the necessary documents to take care of them then I am concerned about their assets. All are important but these particular documents meet a very personal need that I see too frequently in my practice.
My Best,
Jim
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