Back to Basics #3: Important Estate Planning Documents
Power of Attorney
Letter of Instructions
Another crucial document is your power of attorney, which allows you to appoint someone to act on your behalf to make legal decisions about your property and finances. That person, usually referred to as an “agent”, could be a trusted friend, a family member, or an experienced, reputable professional. Power of attorney is crucial should you ever become ill or disabled to the point where you can no longer make important decisions yourself. Keep in mind, however, that granting someone power of attorney is a huge decision in and of itself. Give careful thought before making your choice. Whomever you select should be trustworthy, reliable, and mature enough to handle the responsibility. A third document is your Advance Medical Directive. This catch-all term refers to health care directives, living wills, health care (medical) powers of attorney, and other personalized directives. All of these documents allow you to legally express your preference for continued health care should you become terminally ill. A word of advice. As you finalize your Advance Medical Directive, make sure you have completed your HIPPA Release Forms as well. By having this special form completed, you enable the individuals named in your Advanced Health Care Directive to have access to your healthcare information. This way, they can deal with insurance matters on your behalf at a time when you cannot. Advance Medical Directive
Last, but not least, is a Letter of Instructions. This is document gives your survivors information about important financial and personal matters to attend to after your passing. You don’t need an attorney to prepare it. Although it doesn’t carry the legal weight of a will, and is in no way a substitute, your Letter of Instructions will clarify any special requests you want carried out after death. It may include your funeral preferences, people to notify, account passwords, directions regarding certain possessions, or anything else you’d like your survivors to know. The four documents listed above are all very important, and every adult should have them in their estate plan. Having each of these important documents prepared ahead of time can relieve your family of needless worry, speculation, and expense. Keep in mind, however, that while this letter is a good overview of some important estate planning documents, it certainly doesn’t cover everything. When it comes to planning for your financial future and those of your loved ones, remember that there are many factors to consider. If you haven’t yet completed the documents described above, or if your circumstances have changed and you haven’t updated your estate plan accordingly, it’s high time to do so. Because when it comes to planning, there’s no such thing as starting too early.
But there is such a thing as too late.
In my final “Back to Basics” article, we’ll look at another financial topic centered on planning for the future. In the meantime, have a great month!
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