What You Should Know About the ABCs of Estate Planning

Power of attorney documents
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It's back to school time. A lot of folks are grinding right now, pushing to get to the finish line that marks the launch of a new academic year for their kids. Most of us have been through the routine countless times -- even if it was years or many years ago.

It's all about checking the boxes. School supplies, check. School clothes, check. School transportation, check. You get it; lay the foundation for success up front.

Today, this annual rite of passage may only mean that traffic is about to get a little more hectic in the mornings and afternoons. However, in the spirit of the moment, I thought I'd highlight another opportunity to do what it takes to help ensure a different kind of good outcome.

Here, I'll review the ABCs of maintaining a few important documents in the event things go awry in your life. If you're incapacitated, having three key documents in place and up to date could set the stage for things to happen according to your desired plan.

When it comes to these sorts of preparations, people tend to focus on what happens if they're gone -- with wills, trusts, beneficiary arrangements and the like. That stuff is all important, but it can be just as important to ensure a decision-making framework is in place if you're not able to make them. Here's what you need to build a foundation on this front:

Durable Power of Attorney

If you aren't able to take care of your financial responsibilities, this document allows you to name an agent to do so on your behalf. Whether it's paying bills or selling assets, a durable power of attorney provides broad-ranging authority similar to a general power of attorney; the agent can act on your behalf in almost any legal capacity. However, a general power of attorney terminates if you become incapacitated. while a durable power of attorney remains intact. A limited power of attorney can also be used to provide someone to act on your behalf in very specific circumstances; for example, allowing a friend to sell your car.

Medical Power of Attorney

Here again, you're choosing someone to make decisions for you, but in this case, we're talking medical decisions. Typically, with powers of attorney, it makes sense to have a backup or two in place. For example, your spouse may be the first option to make decisions if you can't, but one of your children could be listed as a contingent – if you or your spouse was unwilling or unable. The same probably makes sense with your durable power of attorney.

Advanced Directive or Living Will

A living will is one type of advanced directive -- a document where you specify your wishes with respect to medical care you do or don't want in the event you're terminally ill. State laws vary, but the bottom line is that you should provide guidance to your doctors and family with respect to your medical treatment.

Of course, these are all legal documents and subject to the specific laws of your state. So while many can be drafted using online tools or forms, it makes good sense to at least have them reviewed, if not drafted, by a qualified attorney. They can ensure your plan reflects your unique situation and considerations. Back to school means back to work, so make sure you check the right boxes to ensure things run smoothly even in the worst of circumstances.

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