Any of our Oakland County readers who are familiar with some of our most recent posts have seen the discussion of some of the most important aspects of a solid, comprehensive estate plan. Of course, it is probably obvious that the first estate planning document to be discussed is a will, since this particular instrument can spell out many of the most important wishes to be carried out, from asset distribution to funeral arrangements. And, for those who may be interested, previous posts have discussed the many uses of trusts, and how they can be especially effective in addressing several areas concerning the transition of assets. However, there are other documents that should not be overlooked for the importance - powers of attorney.
Some people may get a quizzical look on their face when the term "power of attorney" is brought up in an estate planning discussion. Almost every Michigan resident is probably familiar with the basics of a will, but, just like trusts, a power of attorney can be an unknown for many people. What is a power of attorney used for? Well, in Michigan, there are two different kinds that need to be included in an estate plan - the durable power of attorney and the health care power of attorney.
A durable power of attorney is essential for continuing a person's financial commitments. It is used to designate a representative to make decisions on the behalf of the planner, in the event he is incapacitated or otherwise unable to make those types of decisions.
A medical power of attorney is used to designate another representative, or the same one, to make decisions regarding the health care of the planner. Again, this would become effective in the event that the planner was unable to make those decisions on their own.
A good, comprehensive estate plan would need to include these two documents. Having a will is the bedrock document, but other, equally important estate planning instruments should not be overlooked.
Source: Pocono Record, "Nuts and bolts of 'final' preparations," Erin Baehr, Sept. 23, 2012