Estate planning has traditionally focused on minimizing estate taxes and directing the disposition of your assets after death. Yet, in today’s modern world, managing your affairs has become even more complicated as issues involving health care and personal finances, which can arise during your lifetime, have become increasingly more important.
Consider what would happen if you were to suffer a catastrophic illness or become incapable of managing your own affairs. This situation could occur either through a long, gradual process, such as a deteriorating medical condition, or through a sudden and unexpected accident or illness. If such an event were to happen, who would make your important legal, financial, and health care decisions? On what authority would this individual act?
Fortunately, there are some estate planning tools called advance directives that can help in dealing with these contingencies.
Legal and Financial Decisions durable power of attorney grants authority to another person to make legal and financial decisions on your behalf in the event of mental incapacity. The powers granted can be broad or limited in scope. Some decisions a durable power of attorney can assist you with include: your personal finances, insurance policies, government benefits, estate plans, retirement plans, and business interests.