5 Legal Documents Every Person Needs

No one can prevent bad things from happening. But when they do occur, it’s a smart idea to be prepared with the right legal documents at hand. You can take control now and hire an attorney to create some basic legal documents to help avoid pitfalls down the road.

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Find out which documents you need and how they can help you and your loved ones to avoid legal, medical and financial issues.

Last Will and Testament

A last will and testament explains how you want your assets distributed after your death. If you spell out your wishes ahead of time, your loved ones won't have to make critical decisions in their time of grief. If you pass away without a will, a state probate court gets to decide who inherits your money, jewelry, and other assets. What the state court decides may conflict with your personal wishes.

Living Will

If you feel strongly about tube feeding, mechanical ventilation and other interventions, make sure you have a living will. This legal document explains your wishes as they relate to medical care, but it only goes into effect if you become incapacitated. For example, if you're in a coma following a serious auto accident, doctors and other caregivers will consult your living will to determine the best way to treat you.

Your living will should spell out your wishes, not anyone else's. It's okay if you don't want to donate your organs or receive certain medications, but you need to document your wishes so your caregivers can carry them out. Think carefully about whether you want the following interventions:

• Antibiotic infusions
• Hemodialysis
• Mechanical ventilation
• Cardiopulmonary resuscitation (CPR)
• Artificial nutrition
• IV hydration

Before you hire a lawyer to create your living will, talk to a medical professional about what these interventions entail. The more information you have, the easier it is to produce a living will that reflects your personal values. If you change your mind about receiving CPR or using artificial nutrition, you can always update the document.

HIPAA Authorization

The Health Insurance Portability and Accountability Act, better known as HIPAA, governs the use and disclosure of protected health information (PHI). It applies to hospitals, private medical practices, health insurance companies and other entities involved in transmitting PHI via electronic networks.

Although HIPAA protects your privacy, it may also make it difficult for your healthcare providers to share information. If you sign a HIPAA authorization form, you're giving your consent for a covered entity to release your PHI for a specific purpose. For example, if you want a specialist to see the results of your previous blood tests, you can fill out a HIPAA authorization to allow your primary care doctor to release the information.

A HIPAA authorization form must contain the following information:

• The information to be disclosed
• Name(s) of all persons/entities authorized to disclose the information
• Name(s) of all persons/entities authorized to receive the information
• A reason for the requested disclosure or use; "At the request of the individual" satisfies this requirement if there's no other reason you're making the request
• The time period covered by the authorization, including an expiration date
• Your signature
• The date

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Financial Power of Attorney

At some point, you may become unable to make financial decisions on your own behalf. For example, if you develop dementia, you may have trouble balancing your checkbook or determining the best way to spend your money. A financial power of attorney document designates a person to handle your financial affairs if you're unable to do so.

If you decide to create a financial power of attorney, choose someone trustworthy to manage your affairs. A financial POA has the authority to withdraw money from your bank account, prepare your tax returns, pay your bills and even buy or sell assets on your behalf. You need a POA who makes decisions for your benefit instead of theirs.

Healthcare Power of Attorney

A healthcare power of attorney document is similar to a financial POA document, except it allows you to name a representative to handle your medical affairs if you become unable to make your own medical decisions. For example, a healthcare POA has the authority to make decisions about medications, surgery, palliative care and other treatments.

Once you set up a healthcare POA, your representative becomes your healthcare proxy. A proxy has the right to access your medical records and discuss your condition with doctors, nurses and other healthcare professionals. Although many people choose spouses, family members and close friends as their proxies, you can choose anyone you want. Just make sure they're trustworthy and capable of making decisions according to your wishes.

Having a healthcare POA is important because it ensures that medical professionals carry out your wishes, even if you're too ill to give them instructions. Although you may be unable to make decisions, a strong POA document can help you avoid unwanted treatments and maintain control over your life.