Our discussion continues from part one of this article. As a reminder, the terms, power of appointment and power of attorney, sound similar but mean something very different. They are both estate planning terms.
A general power of appointment indicates that the trust beneficiary can appoint the trust assets to anyone, including her creditors. In fact, the person that holds the general power of appointment (i.e. the trust beneficiary) can direct the trust assets to herself, her estate, and creditors of her estate, as well.
Second, powers of attorney are likely more familiar to you than powers of appointment.
The two main types of powers of attorney are health care and financial.
Health Care Powers of Attorney
- The health care power of attorney may also be called a medical power of attorney and may contain a HIPAA release. If it doesnt, you need a separate HIPAA release.
- The health care power of attorney is effective if you cant provide informed consent.
- Your health care agent makes health care decisions for you if you cannot.
- Appoint health care agents and contingent health care agents in your health care power of attorney and make sure they have access to your power of attorney document (and your HIPAA release, living will, and organ donation authorization.)
Financial Powers of Attorney
- The financial power of attorney is also called a general durable power of attorney.
- Its usually effective immediately, but can be drafted to spring to life upon disability.
- It allows your agent to handle your finances and day-to-day business decisions.
- Be sure to name contingent agents as well and to ensure that your power of attorney document is available when needed.
If you have questions about how powers of appointment and powers of attorney fit into your estate plan, consult with a qualified estate planning attorney.