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What types of powers of attorney do people add to estate plans?

On Behalf of | Apr 11, 2024 | Estate Planning

Estate plans include different documents that can protect people under different circumstances. An estate plan typically includes a testamentary instrument, such as a will. This document only has legal authority after someone dies.

People may also want to create documents that protect them if they have some kind of personal emergency. Powers of attorney let one person choose someone else that they trust to assume responsibility for certain personal matters when they cannot handle those issues on their own behalf.

There are several different types of powers of attorney that people may choose to draft. The following are some of the more common options for powers of attorney.

Medical powers of attorney

Naming someone as a healthcare proxy is an important part of the estate planning process. If someone becomes unconscious or unable to communicate with others, they need someone they trust to guide their health care during that time. Medical power of attorney paperwork can be useful for people of any age and all different health conditions. Those experiencing major medical challenges, like a fight against cancer, may find medical powers of attorney particularly useful.

Financial powers of attorney

Financial powers of attorney often provide the authority to handle economic, business or financial matters on behalf of the person drafting the document. Someone might even draft a general power of attorney letting one person take control of their financial and medical needs in an emergency. Oftentimes, people establish limited powers of attorney that only grant an agent or attorney-in-fact certain types of authority. They might allow someone to use resources from one bank account for specific financial needs, for example. Imposing very clear limitations on the access to and use of financial resources may help people feel more confident about assigning economic authority to another party.

Durable powers of attorney

Durable powers of attorney differ from basic documents because they remain legally enforceable for longer. Standard powers of attorney may lose their usefulness when someone becomes permanently incapacitated. Durable documents are still enforceable in that difficult situation. Some people create springing powers of attorney as their durable documents. These documents may have specific requirements for their medical condition before the document takes effect.

Those who think carefully about their current and likely future needs can put together powers of attorney that balance the need for protection with the need to limit what authority someone grants to others. Careful estate planning can protect people in a variety of different challenging personal scenarios. The creation of powers of attorney can make people feel more confident about meeting their financial and medical needs regardless of what happens in life.