Retirement planning means deciding on housing, income, investments, health care and estate planning—many of which can be emotional and serious consideration about major life changes. The timing of these decisions and their interaction also requires careful planning.
In "Older & Wiser: Powers of Attorney," The Harvard Press says that because of the complexity of these issues, it’s important to seek professional assistance regarding retirement and estate planning. While many of us are tempted to avoid uncomfortable decisions, careful planning can save you thousands of dollars and can help you avoid unnecessary guardianship or institutionalization.
Powers of attorneys are important and powerful documents. Powers of attorney are executed by an individual, the "principal," to give another individual, the "attorney-in-fact," power to decide financial issues and manage assets on the principal's behalf. The principal can define decision-making authority in the power of attorney document.
Based on how they're drafted, powers of attorney can become effective in different ways. A durable power of attorney must be executed while the principal is still competent. It will be immediately effective and stay in effect, even if the person becomes incapacitated. A springing power of attorney is different. It becomes effective when the person is no longer competent. A major disadvantage of a springing power is it requires a physician to agree the principal is incompetent. This can be a time consuming procedure at a time when immediate action is needed!
The principal always retains the ability to act on their own. Think of a power of attorney as a “second set of keys” to the car. All powers of attorney can be used without the consent of the principal as long the action is in the best interest of the principal. This makes choosing the attorney-fact a critical decision. All powers of attorney can be revoked by the principal in writing.
Drafting and executing power of attorney documents is an individualized process. So it's never a good idea to use a boilerplate form from the Internet that doesn't reflect the individual's needs and circumstances. Most of the time these documents are “bare bones” and do not contain the provisions to permit the attorney-in-fact preserve assets if a catastrophic illness occurs. A properly drawn and executed power of attorney provides individuals peace of mind and assurance that their affairs will be addressed appropriately. Contact a qualified estate planning attorney.