This is not breaking news, but it’s an important reminder: A well-drafted Power of Attorney ensures that if you become incapacitated, a person you trust can step into your shoes and continue to handle your affairs, make decisions for you and more. Too many folks do not have any Power of Attorney at all. A lot of folks have very old documents that will not be sufficient for future needs.
Without a valid Power of Attorney, guardianship may be required. This is a court-driven process that can get ugly. There is no reason that guardianship should ever be considered unless there are no alternatives. The last thing you should ever want is a court to declare you mentally incompetent, taking away all of your rights, and giving the guardian power to someone who you potentially don’t know or don’t trust.
Instead, make sure you have a recent Power of Attorney (usually drafted within the last 4-6 years). You should have both a Health Care Power of Attorney and a Financial Power of Attorney.
In particular, I find Financial Powers of Attorney to be crucial if someone becomes incapacitated and has not done any elder law/long-term care planning. With a well-drafted POA, I can take advantage of strategic gifting, use of trusts and other vehicles to preserve assets. Without a POA, it’s unlikely that I can utilize these tools.
Of course, having a complete estate plan is important—a Last Will & Testament, maybe a trust, and also your Powers of Attorney. Make sure to have your plan reviewed every 3-5 years, and sooner if a major change occurs in your family.