Some people think that a simple will is enough to give them the basic estate plan that they need. While a will is better than no plan at all, a complete plan contains more and can do more to protect you. One element of every complete plan is the inclusion of powers of attorney. These documents can help give you the peace of mind that comes from knowing that, if you cannot make decisions for yourself, the person who will be speaking for you is the person you specifically wanted to do so.
While the rate of people developing dementia in this country has declined overall in the last few years, the news is not all good. The popular medical website webmd.com reported on a study published in the American Journal of Preventive Medicine that revealed that, although the overall rate has dipped, rates remain higher in rural areas of the country. Another conclusion of the study was that the incidence of cases of dementia is expected to double by 2050 due to the baby boomers.
Whether or not you are a Baby Boomer, dementia is a possibility for which everyone needs to prepare themselves. One aspect of this preparation is estate planning. There are two powers of attorney that will appear in most any complete estate plan. One is the health care power of attorney. This document allows you to name the person (your “agent” or “attorney in fact”) who will make your personal, medical and other health care decisions on your behalf in you cannot make them for yourself due to dementia or another form of incapacitation. (The law also allows you to structure your power of attorney such that the designated powers become effective immediately, as opposed to upon the event of your becoming incapacitated.)
As with any power of attorney, it is important to choose your agents carefully and thoughtfully. Your agent under your health care power of attorney may have considerable decision-making authority, including determining whether or not you will enter a nursing home. Additionally, in some states, one document covers both the traditional functions of a health care power of attorney and a living will, meaning that your agent could also have power over your end-of-life decisions.
Another part of most every complete estate plan is the financial power of attorney, which allows the person you name in the power of attorney document to make decisions regarding your wealth and your assets. This power of attorney can grant very broad or limited powers, depending on the language in your document. You can give your agent the power simply to do maintenance activities like paying your bills, or wide-ranging authority like buying and selling assets in your name.
Another way to ensure that the management of your assets is handled seamlessly should you become incapacitated by dementia is the revocable living trust. A living trust allows you to name yourself as the initial trustee who manages all of the assets that you place within the trust. Then, should you become incapacitated, the trusteeship of your living trust will transition from you to the person you named in the trust document to serve as your successor trustee. A properly funded and maintained living trust may help you and your family avoid the need for a conservatorship, which can be an intrusive, expensive and stressful court action.