Committing to the creation of an estate plan is an important decision. That choice often puts people in a position where they have to make a number of other important choices as well.
The selection of necessary and appropriate estate planning documents is a key component of the estate planning process. People often need more than a will for their protection. Many people decide they want to add powers of attorney to their estate plans.
Powers of attorney create a number of additional decisions for testators. What key decisions do people typically have to make when adding powers of attorney to an estate plan?
1. What types to draft
There are multiple different types of powers of attorney that people can add to their estate plans. Many people choose between basic financial and medical powers of attorney.
They may choose to separate those two types of authority to avoid scenarios in which one party has too much authority over their circumstances. Some people may also choose to add durable powers of attorney to their estate plans to protect them from the possibility of permanent incapacitation in the future.
2. Who to empower as trustee
The right estate planning documents are unlikely to fulfill their intended purpose if people empower the wrong individuals. A power of attorney requires an organized, responsible and trustworthy attorney-in-fact or agent.
The principal drafting documents needs someone who is capable of fulfilling the duties outlined in the powers of attorney. The selection of an agent is a key aspect of establishing effective powers of attorney.
3. What restrictions should the documents include
Principals drafting powers of attorney can limit the authority of their agents or attorneys-in-fact in several ways. They can require that incapacitation last a certain amount of time before the documents take effect.
They can limit an attorney-in-fact to only accessing certain accounts or handling certain financial responsibilities. The right limitations integrated into the documents can give people peace of mind because they know that the person they empower has less of an opportunity to misuse that authority.
Discussing the need for protection can help people make the right choices when drafting powers of attorney. Effective documents may give people peace of mind and protection in emergency situations.