A last will and testament is the foundation of estate planning for most individuals, but there are other essential documents to create and sign as well. Unlike a will, which distributes assets after an individual’s death, these documents help a person manage financial and medical situations in the event of incapacitation.
A power of attorney and designation of patient advocate are two documents that are vital parts of estate planning for most individuals.
Power of attorney
According to Forbes, a power of attorney form is a critical estate planning document. There are two different options when it comes to signing a power of attorney. A durable power of attorney is generally more common, and this document takes effect as soon as the individual signs it. A durable power of attorney continues to be effective if the principal becomes incapacitated. A springing power of attorney only takes effect when an illness or injury incapacitates the principal. However, Forbes warns that a springing power of attorney may have more associated challenges than a durable power of attorney.
Naming an agent in a power of attorney form gives that agent the authority to make financial decisions for the principal. The agent even has access to assets that are solely in the principal’s name.
Designation of patient advocate
Another important estate planning document is a designation of patient advocate form. According to the State Bar of Michigan, this form gives an individual the chance to name an advocate to make medical decisions for him or her. If an individual becomes unable to make or communicate his or her decisions about medical care, the advocate may make those decisions and provide instructions for organ donation. The patient advocate must act in the principal’s best interest.