Chapter 1: Review Test 6

Survey the following paragraph from a college finance textbook. Then answer the questions that follow it.

          ¹Estate planning involves key decisions regarding living wills and power of attorney. ²A living will is a simple legal document in which individuals specify their desires in the event they become mentally or physically disabled. ³For example, you may draw up a living will that states your desire not to be placed on life support if you become terminally ill. ⁴In this case, a living will also has a financial impact. ⁵Your estate could be charged with large medical bills. ⁶In this way if you do not want to be kept alive by life support, you can ensure that the assets from your estate are used in ways that you prefer. ⁷A power of attorney is a legal document that gives another person the power to make specific decisions for you in the event that you are incapacitated. ⁸For example, you may name a family member or a close friend to make your investment and housing decisions if you become ill.