When it comes to estate planning it is not only important to have the right documents, but it is crucial to have thought through the people who will be the beneficiaries, child custodians, and especially any individuals who will hold power of attorney over your affairs.
A power of attorney is a legal document that gives another person the authority to make specific decisions on your behalf, as well as to act on your behalf in regards to those powers. They may be created for financial or health matters to allow another person to act on specific items when you are not able to, for example in times where you may be incapacitated.
A financial power holder may pay your bills by accessing your bank accounts, file your taxes, or manage your investments. A health care power holder may make decisions regarding your personal care.
You may list the same person for all powers, but often the individual who is best at one may not be the best at another. You will want to have a list of several individuals to act in succession (known as contingent power holders) in case the individual in question can not act on your behalf.
For financial matters, consider if an individual is financially responsible. Do they file their taxes on time? Do they appear to pay their bills and not live beyond their means? Are there any warning signs in what they talk about that would lead you to believe otherwise?
Being financially responsible does not mean that one needs to be an expert at financial matters, but they do need to recognize the actions to take and be diligent about meeting deadlines and following through. If an individual is generally responsible in this way you can provide instructions for them to seek out help from advisors who are familiar with parts of your finances and your overall plan.
For health matters it is important to find someone who will stick up for your values and who is comfortable with making sure you receive the right care. This individual may be someone who is not afraid to stand up to authority when they know they are in the right, and who is good at gathering information, making complicated decisions based on your values, and making sure individuals follow through appropriately.
Robert Schmansky, CFP®
Clear Financial Advisors, LLC
Royal Oak, MI