Your estate plan benefits your heirs, but how does it help you?
You have taken the time and effort to create a will in Michigan, and you feel reasonably confident that your children are not going to suffer financially if you die while they are young. However, this estate planning tool only gives peace of mind for the time after your death. What if you are involved in a car accident that leaves you in a coma?
According to the State Bar of Michigan, the document that can resolve many of the financial issues that may crop up while you are incapacitated is known as a power of attorney. In this document, you name an agent who you trust to take care of your finances for as long as you are unable to manage on your own.
Suppose your medical bills climb as you are kept hospitalized until you are stable, and then transferred to a long-term care facility where coma patients are treated. You may not have a lot of money in savings, but you have quite a bit of equity in your home. Your agent may be able to take out a second mortgage on the real estate because of the financial authorization you have provided. Your agent may also contract for medical care for you and purchase insurance on your behalf.
Maybe you expect the guardian you have named in your will to step in and care for your children until you return home, but you do not want him or her to bear the brunt of the financial burden for their care. Your agent can write checks from your account to cover expenses, make deposits into your account, pay your bills and take care of all the other day-to-day financial duties.
If you are married, it may make sense to you to choose your spouse to be your agent. You may want to allow your spouse to continue to take care of some financial matters, such as those things that come out of your joint account. However, you could name someone else as agent and limit the duties he or she may perform to those things you do not want your spouse to have to worry about while you are incapacitated.
This is general information to give you an idea of the functions of a power of attorney. However, it should not be interpreted as legal advice.