Protection while you are living.
You may have heard that estate planning is critical if you plan to pass assets to loved ones at your death. While this is true, especially for those people with substantial assets, estate planning is much more comprehensive than simply arranging your asset transfers at death.
One of the most important issues to be dealt with in estate planning is what happens to your assets and your person when you are disabled and unable to communicate your wishes to others. Since you are not yet deceased, your will has no current effect regarding your assets. Even more important, your will has no effect over your body.
Prudent estate planning considers all the possible calamities that could affect you while you are still alive. For example, it is much more likely that a person will suffer a sever medical crisis requiring an extended hospital stay before they are 65, than is the likelihood that the same person will die before he or she reaches the same age.
Proper estate planning should include both medical and financial powers of attorney or a living trust arrangement to prepare a person for a major medical crisis. Either can be used to prepare a person for the onset of illness, senility, or any other major medical problem that might cause the person to be unable to make decisions normally undertaken as a part of their daily activities.
A power of attorney is a written document wherein one person, called the principal, authorizes another person, called the agent, to act and perform functions on the principal's behalf. Two main types of powers of attorney are a general power for financial affairs, and a medical power for medical decisions.
General powers of attorney can be used for a wide range of estate planning and estate distribution functions.
