Retirement planning involves more than managing investments and income. A comprehensive estate plan should also address the possibility of incapacity and the need for others to make financial and health care decisions on your behalf. Two foundational tools in this process are a financial power of attorney and a representation agreement for personal care, commonly referred to as a health care proxy.

This blog outlines why these documents are critical, how they relate to legal issues like the distribution of your assets, and what retirees should consider when building a secure future.

What Is a Power of Attorney?

A Power of Attorney (POA) is a legal document that allows a trusted person to make financial decisions on your behalf. Depending on how it’s structured, it can be:

• General POA: Broad authority over your financial accounts, real estate, and more
• Limited POA: For specific tasks or time frames
• Durable POA: Stays in effect if you become incapacitated
• Springing POA: Becomes effective only under certain conditions

Choosing a financial power of attorney is essential to ensure continuity in managing bank accounts, investment accounts, insurance policies, and retirement accounts if you’re unable to do so.

What Is a Health Care Proxy or Representation Agreement?

A health care proxy, or representation agreement, lets you designate someone to make healthcare decisions for you. These might include emergency treatment approvals, ongoing care choices, and end-of-life decisions.

You may also pair this document with a living will, which outlines your personal wishes regarding medical care. Together, these provide guidance to your proxy and medical teams and reduce the risk of confusion among family members.

Why These Documents Matter

Without these in place, even your closest family may lack the legal authority to make timely decisions. The consequences include:

• Court-supervised guardianship or conservatorship
• Delays in accessing bank accounts, insurance policies, or managing real estate
• Family conflict over personal care and treatment plans

Having these important documents ready helps ensure financial stability, protect your digital assets, and prevent legal complications.

Choosing the Right Agent or Proxy

Your selected representative should be:

• Trustworthy and familiar with your values
• Comfortable with complex financial decisions and healthcare decisions
• Available and nearby if emergencies arise
• Capable of clear, assertive communication with your estate planning team

You should also name a successor agent as a backup and communicate your wishes clearly for peace of mind.

How These Fit Into the Estate Planning Process

These tools complement other components of your estate plan, including:

• Living trust or revocable living trust for managing real estate and other financial accounts
• Life insurance policies with updated beneficiary designations
• Instructions for distributing digital assets and family heirlooms
• Planning for estate tax, tax liabilities, and size of your estate

Working with a financial advisor, tax advisor, and estate planning lawyer ensures that these elements coordinate to support your overall financial security.

When to Update Estate Planning Documents

Review your estate planning checklist regularly or after significant life changes, such as:

• Marriage or divorce
• Death of a named agent
• Birth of children or grandchildren
• Changes in financial status

This ensures your plan reflects your current situation and remains compliant with evolving family law and tax planning regulations.

Conclusion: Open Communication Is Key

Thoughtful estate planning reduces uncertainty, clarifies intent, and protects both assets and relationships. By including a financial power of attorney and representation agreement, you’re taking responsible steps toward protecting your financial security and care preferences.

At TruNorth Advisors, we collaborate with clients and their professional teams to align estate documents with broader financial goals.

If you’re ready to begin or review your estate plan, schedule a consultation with TruNorth Advisors for guidance, clarity, and peace of mind.

Disclosures: This article is for informational purposes only and does not constitute legal, financial, or tax advice. TruNorth Advisors does not provide legal services. Please consult with a qualified estate planning attorney, tax professional, or legal expert to address your specific needs.