You may believe that once you have drafted and executed your will, your estate plan is complete. But a will is just one piece of an estate plan.
A power of attorney works in conjunction with your will to provide you with a more comprehensive estate plan designed to cover all types of situations. The documents work together to provide you with protection for the future.
The different goals of a will and power of attorney
A will declares who will own your assets after you pass away. You are the testator of the will and you decide who your heirs are and what you want them to receive.
When you draft a will, you must name an executor. This is the person responsible for distributing your assets to your heirs, paying any outstanding debts, filing a final tax return and managing any disputes involving your estate.
A power of attorney is a legal document authorizing someone else to make certain decisions on your behalf. Unlike a will, which only takes effect upon your death, a power of attorney takes effect if you become incapacitated and cannot make decisions on your own.
Medical and financial powers of attorney
The two main types of powers of attorney are medical power of attorney and financial power of attorney.
It is usually best to execute both types of powers of attorney. A medical power of attorney appoints someone to make major medical decisions on your behalf, based on your wishes. Whether or not to remove you from life support is an example of a major medical decision made by your power of attorney.
Financial power of attorney gives someone the power to make financial decisions and take certain financial actions on your behalf.
Durable and springing powers of attorney
You can also choose when you want your power of attorney to take effect. A durable power of attorney is executed the day you sign it. If you signed it today, the person you appoint to make decisions for you has immediate power to make these decisions, even if you are still competent.
A springing power of attorney is not executed until a specific event occurs. The event is typically your incapacitation.
For example, if you fall into a coma, the person you appoint as your financial power of attorney makes sure that your bills get paid while you are in the coma. If you wake up from the coma and can resume paying your bills on your own, your power of attorney is no longer in effect. The power “springs’ back to you to make your own decisions.
There are certain requirements that must be met for a power of attorney to be valid. Georgia law states that a power of attorney must be signed by you and one or more witnesses and notarized. You, the witnesses and the notary must all be present when signing the power of attorney.
It is almost always best to execute a will and power of attorney at the same time. The power of attorney provides protection during your lifetime while the will protects your heirs after you pass away.