It's never too early to start thinking about the estate planning process. Most people typically won't need to worry about their plans until well into their retirement, but there are still situations that can arise for which you'll want to be prepared.

For example, what happens if you are in an accident or become ill and you're incapacitated? Who will make decisions about everything from your finances to your estate?

When preparing for this, many people find peace of mind by creating a durable power of attorney (DPOA). Here's what you need to know about this written instrument and how it can benefit your long-term care planning.

What Is a Durable Power of Attorney?

Let's start by defining a general power of attorney. It's established through a legal document in which you (as the "principal") give permission to one or more persons (or "agents") to act on your behalf. How narrow or broad this power is can be defined by you. With a broad power of attorney, the person(s) you appoint can make decisions about your finances, property and medical care. You may also choose to give your power of attorney a narrower scope so the agents can only deal with matters relating to your property, not your general health or finances.

If you think having a general power of attorney has you covered, there's one very important thing to remember: If you become mentally incapacitated, the agreement will be severed, which means that right when you need this protection the most, it could be gone.

Having a durable power of attorney is one way to help ensure continuity over your estate. You can include language within the legal document that specifically extends DPOA powers if there's a time when you're not mentally able to make decisions due to accident or illness.

How to Establish a Durable Power of Attorney

One of the reasons why many people choose to appoint a DPOA is because they want to plan for the unexpected. If something happens to you, having an established DPOA can help ensure your property, your finances and even potentially your health are in good hands.

If you decide to establish a DPOA, you'll need to include that language in a legal document. In addition, you'll want to specify what kind of authority this person will have.

In general, there are two main types of DPOA to consider:

• Financial: This gives a particular person(s) the power to manage your finances if you are incapacitated.
• Medical: This gives the person(s) the power to make medical decisions for you if you can't. This is also often referred to as a health care proxy.

Depending on your situation, you may decide you'd like to name different people for these roles or have one person who is in charge of everything. However, even if you choose one person to be your DPOA, consider making two separate documents with specific details and guidelines that are laid out in advance. This is a common choice.

When it comes to creating a DPOA document, each state has some guidelines you can follow. You'll want to get your wishes down on paper, sign it and have it notarized. While creating the document, make sure you're very clear on not only who your DPOA is, but also the specific abilities they will have. In addition, set some time aside every year to revisit the document, just in case you need to make any changes.

A durable power of attorney can help protect you against the unexpected, so it's a good idea to set one up sooner rather than later. It will give you peace of mind because you'll know that in the event of an emergency, your finances, estate and health will be under the watchful eye of someone you trust.