What is the purpose of a power of attorney in estate planning?

The purpose of a power of attorney in estate planning is to designate someone to make financial or healthcare decisions on behalf of another person. This legal document is critical, particularly in scenarios where an individual becomes incapacitated and can no longer manage their own affairs. By establishing a power of attorney, the individual (the principal) can specify who they trust to act on their behalf, ensuring that their financial matters and healthcare decisions are handled according to their wishes.

This flexibility is vital because it allows the appointed agent to make immediate decisions regarding the principal's finances and health, without having to go through a lengthy court process to obtain guardianship or conservatorship. It effectively allows for the continuation of financial transactions, payment of bills, and medical decisions in a timely manner, reflecting the principal's preferences and best interests.

The other choices, while relevant to estate planning, do not accurately describe the primary function of a power of attorney. For instance, creating a legal document for selling property is more specific to real estate transactions and does not encompass the broader implications of delegating decision-making authority. Distributing assets after death pertains to wills and trusts, which are separate instruments, and establishing a living trust serves a different purpose related to asset management during a person's lifetime and after death