Historically, estate planning has focused on easing the burden of taxes and the proper disposition of assets at death. However, managing your affairs in the modern world has become more complicated, and quality of life issues (involving health care, finances, and how critical planning decisions are to be made) are becoming increasingly more important. Estate planning tools that can provide instructions for certain lifetime contingencies are called advance directives.,
One mechanism that can provide for financial decision-making is a durable power of attorney. This agreement grants authority to another person to make legal decisions on your behalf in the event of mental incapacity. The powers granted can be either broad or limited in scope, and can include such areas as insurance transactions, estate transactions, money management decisions, government benefits, and retirement plan decisions.
A living will is a set of instructions for a health care provider, stipulating the extent to which measures should be taken to maintain your life, should you be unable to express your wishes. In contrast, a health care proxy appoints an agent to make those health care decisions. Both directives come into play only when you are unable to make your own health care decisions.
Advance directives are generally inexpensive and easy to implement; they should be considered essential estate planning tools for all individuals, regardless of age. In the absence of such documents, court intervention (with the accompanying time and expense) may be necessary to carry out your financial and health care desires at precisely the moment when facility and timeliness are of greatest importance.
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