POWER OF ATTORNEY AND LIVING WILL

A financial power of attorney enables a person to appoint a trusted friend or family member to act on their behalf, even after the individual becomes incapacitated and can no longer make decisions on their own. Thus, a power of attorney (also known as a durable power of attorney) is simply a legal document in which you ("the principal") designate a trusted person ("the agent") to make decisions for you.

The kinds of powers typically granted involve financial management and health care decisions. They may include handling banking and real estate transactions, or stock and bond transactions; entering safe deposit boxes; providing help on tax filing, and authorizing medical decisions and nursing home admissions.

The key to this law is that the principal is the person in charge of the relationship. He or she selects the person they want. The principal also defines the powers to be included in the durable power of attorney. And if the principal isn't satisfied with the relationship, the powers can be revoked and the relationship ended.

Avoid Expensive Court Battles
Importantly, a power of attorney can prevent a time-consuming, expensive and emotionally difficult guardianship lawsuit. Such a lawsuit is required when a power of attorney has not be executed.

Living Will
Also known as an "advanced medical directive", these are valuable documents in the event of a terminal illness. Doctors and hospitals are directed in many living wills to refrain from providing heroic measures when the ill person is deemed to be permanently unconscious.

Basics of Estate Planning
While the durable power of attorney and living will are most often thought of with elderly individuals, it should be a component of the estate plan of every individual with assets and income. Even young adults should have one in the event they are involved in an accident rendering them incapacitated.