One of the most overlooked but critical documents that should be included in a thorough estate plan is the power of attorney. In fact, the best estate plans should include two separate power of attorney documents, potentially even a third.

Many people shy away from power of attorney documents because they worry about losing authority over their own life. However, that is an unnecessary fear, as power of attorney protects the individual assigning the authority to another, not the person who wields it on behalf of another.

Familiarizing yourself with the different kinds of power of attorney documents can help you determine what would be best for your own estate planning or your parents as they begin to plan their estate.

Medical power of attorney documents guide future health care

If you are ever in a situation in which you won’t be able to make important medical decisions on your own behalf, a medical power of attorney gives someone else the authority to make those decisions.

This document is particularly important if you do not have a spouse or if you worry about the amount of stress such decision-making would place on your spouse. Naming someone you trust as power of attorney in medical scenarios can take the pressure off those closest to you and ensure that your wishes get followed.

You should always complete an advance medical directive along with the power of attorney for health care purposes. Your advance directive should include your wishes about the most common concerns, such as organ donation, resuscitation and life support.

Financial power of attorney protects you when you can’t take action

If something happens to you and you can’t get to the bank to pay your mortgage, you shouldn’t lose your house as a result. A financial power of attorney helps ensure that there is someone with the authority to handle important financial tasks in the situation that you cannot.

It is important to be explicit in how you limit the power granted to someone in a financial power of attorney. Typically speaking, limiting what funds they can access to only what is necessary to pay bills or to a single account is a good way to reduce your risk.

Durable power of attorney protects you if you worry about future health issues

Do degenerative conditions run in your family? Did your grandparents suffer from Alzheimer’s disease? If you have any reason to think that you will experience substantial cognitive decline towards the end of your life, a durable power of attorney may be your best option.

A standard power of attorney document no longer has any authority when the individual assigning authority either dies or becomes incompetent to make their own decisions. In other words, medical conditions that lead to issues like dementia could invalidate your power of attorney documents.

Understanding the difference between the three primary kinds of power of attorney documents can help you determine what is best for your estate plan and living will. Working with an attorney to draft these documents can protect you and your wishes in the future.