While some people in New York are diligent about preparing wills, trusts and other documents related to estate planning, one area that sometimes gets overlooked is establishing a power of attorney. Not having a power of attorney in place can have repercussions in unexpected ways even if you are only temporarily incapacitated.
The types of power of attorney
Power of attorney documents take two main forms: one for finances and one for health care. A power of attorney for finances gives the agent you name access to your bank accounts to pay bills as well as obtain loans or perform other financial acts. This document can give your agent limited or broad powers. You can also give your agent “springing” power, which only goes into effect if you become incapacitated.
A health care, or medical power of attorney, enables the person of your choosing to make medical decisions on your behalf if you can’t make them yourself. This document typically lists preferences for medical care and end-of-life decisions. It’s also valid if you suffer from dementia or Alzheimer’s disease.
What happens if you haven’t set up a power of attorney
Not having either power of attorney document can create confusion and even animosity among your family members if you become unexpectedly incapacitated. Beyond that, not having these documents can have implications beyond the immediate due to taxes related to estate planning.
Begin planning early
Discussing a power of attorney and ensuring that you have both types in place should begin early in the estate planning process. Discussing a financial power of attorney should be one of those tax topics as related to estate planning that you should discuss with a legal professional even if you don’t put one in place immediately. Having that protection is essential. You can always modify it in the future if needed.