Retirement & Financial Planning Report

Image: James R. Martin/

As part of your estate planning, don’t forget to consider a power of attorney. This document names someone else to handle your affairs if you can’t. The major types:

* Limited power of attorney. This document gives an agent authority to act on your behalf under specific circumstances, such as a home sale closing that you can’t attend, and/or for a defined period of time.

* General power of attorney. This document grants broad authority to your agent, who at any time can write checks to pay your bills, sign contracts on your behalf, take distributions from your IRA, and so on.

* Springing power of attorney. This document is not effective when you execute it. Instead, it “springs” into effect upon certain circumstances, such as your becoming incompetent. You can state in the document what is needed to verify your incompetency, such as letters from two physicians stating that you no longer can manage your own affairs.

Why is a power of attorney so vital? Because your agent can act in case you become incapacitated. To serve this purpose, a power should be “durable,” meaning it will remain in effect if you become incompetent. Other powers of attorney may not be recognized if a court finds that you no longer can manage your affairs.

Without a durable power of attorney, family members might have to petition a court to appoint a guardian to act in your best interests. Guardianship proceeding can be expensive and contentious; you might wind up with an unwelcome individual managing your finances. To avoid such a scenario, name someone you trust as agent on your durable power.

A health care power of attorney, sometimes known as a health care proxy or a medical power of attorney, also should be part of your estate plan. This document names an agent to make decisions about your medical treatment if you become unable to do so.

The agent named in your health care power does not have to be the same person that you name as agent for a “regular” power of attorney, one that affects your finances. For your health care power, you should select someone in your family who is a medical professional or someone you trust to see that you get all necessary care. Depending on state law, it may go into effect when a doctor (whom you can name) states in writing that you lack the ability to make or communicate health care decisions.

Key Provisions of FEHB for Federal Employees

TSP C Fund Back to All-Time

Immediate Retirement Under

Your OPF Is Your Retirement Backbone

FERS Retirement Guide 2022