Estate Planning Guide: Documents That Matter During Your Life

As we’ve pointed out previously, estate planning is much more than signing a Will. There are documents included in an estate plan that are important during your life, and after you’ve passed.

What documents matter during your life and why?

Financial Power of Attorney

If you become incapacitated, you should have someone who can make decisions on your behalf. Likely, you have people who you would trust to handle your affairs, and others you would not. Therefore, having a Power of Attorney (POA), is important.

When you sign a financial Power of Attorney, you appoint a person – your agent – to act on your behalf on matters you include in your Power of Attorney. Common uses of a POA are signing bank paperwork, filing tax returns, and assisting with real estate transactions.

Your POA gives your agent immediate authority to act on your behalf – even if you are not incapacitated. While this can be helpful at times, it confirms why it is so important to appoint someone you trust.

The agent you appoint is bound by a fiduciary duty of care. This means they must act in your best interest.

A POA can be drafted for a specific purpose – for instance appointing an agent to handle a real estate closing while you are travelling.

NOTE: Your Financial POA does not include provisions for your agent to make decisions about your health care. For decisions about your health care, you need a health care proxy.

Health Care Proxy

A health care proxy (HCP) is different from a financial POA in two ways. First, the HCP is narrow in scope – it only governs health-related decisions. Second, the HCP is only effective in the event you become incapacitated.

Your POA agent and HCP agent do not need to be the same person.

It is important that you communicate your wishes to your HCP agent. Being a HCP agent can be difficult, so ensure your agent knows and understands your wishes.

Living Will

A Living Will does not appoint an agent. Rather, the purpose of a Living Will is to provide specific written instructions for health care decisions and end-of-life medical care.

Your HCP will rely on your Living Will as a guide to make health care decision on your behalf.

Your HCP agent should have a copy of your Living Will, and a clear understanding of what your wishes are.

Most estimates show that close to half of Americans do not have a Will. Likely, even fewer have POAs or HCPs. We know that estate planning can be uncomfortable, but it is important. We often tell our clients – it’s not for you – it’s for your loved ones.

If you want to meet with an attorney about getting your estate plan done, or if you need to update your existing plan, the estate planning attorneys at Gray Law Group can help. We offer a free consultation so you can decide what action you need to take. Let's chat.