Estate planning is unique for everyone, but four documents are crucial for planning for adverse, unexpected circumstances that could leave you incapacitated. By understanding what they are, you can better appreciate their significance to you and your family.
A last will and testament
The estate of a person who dies without a will is subject to Pennsylvania’s intestacy laws, meaning all assets you do not hold jointly or with no beneficiary designations might not go to the people you love the most. The probate court will appoint an estate administrator for you. If you have a will, you can assign a personal representative of your choosing who will distribute your assets and carry out your last wishes the way you intended. A will is also where you can nominate a guardian for your minor children if something happens to you while they are too young to care for themselves. Even though a will does not bypass probate, it can serve as the backbone of your estate plan.
A financial power of attorney
A financial power of attorney (POA) allows you to entrust another party with the financial matters of your estate in the case of incapacity or death. You can name an agent to
- Manage your bank and investment accounts
- Buy and sell real estate
- Pay your bills
- Invest on your behalf
- Conduct business transactions on your behalf
- Pay your medical expenses
- File and pay taxes
- Transfer assets
- Sell or gift assets
- Purchase insurance
They will oversee all your financial affairs, specifically those you state in your POA document. Therefore, consider choosing someone who will act in your best interests and with the experience and skills to handle your finances adequately.
A health care power of attorney
A health care or medical power of attorney is like a financial power of attorney, except that instead of financial decisions, they make medical ones on your behalf. Without this document, your family may have to go to court before they can legally make medical decisions for you. They may even fight over the treatment you will receive.
Advance health care directives
You can add advance health care directives to your health care POA or designate your advance health care directives in your will. You can add a copy to your medical records. Advance health care directives refer to the measures your health care provider or physician will take regarding end-of-life situations. You can explicitly state in the POA document whether the person you give a health care POA to will follow your wishes or use them as a guide.
Your estate plan is one you design to protect yourself and your loved ones. It is custom-made to fit your needs and best interests.