A Power of Attorney is an important piece of your estate plan.
Most people don’t want to give up control of their financial affairs or have others make medical decisions for them. But if you become mentally incompetent or physically incapacitated and can’t manage your own affairs, you need someone to step in on your behalf. If you haven’t already set up a power of attorney, the courts will appoint one for you. This person may not be the one you would have chosen.
What is a Power of Attorney and Why Would I Need One?
A power of attorney is an important part of your estate plan. It’s a legal document and having one in place prevents time-consuming and costly delays should your family need to step in for you. You, as the principal, designate an agent to act on your behalf.
There are a number of circumstances when your agent would need to make a decision for you, including:
· Handling every day financial affairs, such as paying bills.
· Signing legal documents for you if you can’t be there yourself.
· Making medical and end-of-life decisions.
· Recommending a guardian.
There are several main types of powers of attorney. Sometimes it’s best to have more than one power of attorney to handle different situations and appoint a different agent for each one.
The Main Kinds of Powers of Attorney
Limited or Special Power of Attorney
A limited or special POA limits your agent to a specific situation or time frame. For instance, a young woman going into the military may give her parents power of attorney to handle her financial affairs while she’s deployed. Or someone might be given power of attorney to sign documents on the sale of a home when the homeowner can’t be there in person. This type of power of attorney ends on a particular date (the return from overseas by the service member) or when the particular action is complete (closing papers are signed).
General or Non-durable Power of Attorney
A general POA is comprehensive and gives your agent all the rights and responsibilities that you, the principal, would have. This includes paying your bills and signing documents for you, as well as conducting any other financial transactions.
This type of POA isn’t durable; it ends when you become incapacitated, you revoke it or you pass away.
Durable Power of Attorney
A durable power of attorney can be general or limited in scope. Like a non-durable POA, it’s comprehensive, giving the agent power to act on your behalf in all cases. The difference is that it becomes effective when you become incapacitated, but not before. A durable POA doesn’t have a set time period, however; it ends when you pass away or if you rescind it.
Springing Durable Power of Attorney
Some states, Alaska included, have springing powers of attorney. This type of POA becomes effective under particular circumstances, such as if you become incapacitated. Because of the nature of this power of attorney, the document needs to clearly state the triggering event and the standard for which incapacity will be determined.
Medical Power of Attorney
Sometimes called a Durable Power of Attorney for Healthcare or a Healthcare Proxy, this type of POA grants your agent authority to make medical decisions on your behalf, including the decision to end life. A medical power of attorney does not go into effect as long as you are conscious and can make decisions on your own. It ends when you recover from the incapacitating condition or you pass away.
Who should I appoint?
Because a power of attorney puts so much control in your agent’s hands, it’s very important to choose him or her carefully. You should pick someone you trust without hesitation. You can also pick different agents for different POAs. For instance, you could ask a trusted friend who is money savvy to be your agent in your financial affairs.
If you’ve been having ongoing discussions with your spouse or family members about end-of-life care or other medical questions, picking a separate agent for your medical POA might be a good idea. They will already be familiar with your wishes and more likely to agree to being in the role of agent.
Although it might be tempting to designate more than one person to be your agent for the same POA, it’s not advisable. If they don’t agree on what needs to be done or can’t follow through on your medical wishes, it may end up in a court fight. If you and your spouse are elderly and have each other named as agents, you might also consider a successor agent in the event that one of you passes away first or can’t serve in that role when needed.
How do I get a Power of Attorney?
An important piece of your estate plan should include one or more powers of attorney. A power of attorney is reassurance to you and your family that your affairs will be taken care of when the need arises. It allows you to have some measure of control now so you have peace of mind later.
Because of the nature of this document, it’s best to have an attorney write it up. Doing it with one of the forms available online may create legal obstacles and challenges at a time when it’s most critical to have everything in place. And if you already have a power of attorney in place, it’s wise to review it periodically.
If you still have questions, consider signing up for one of our free workshops, that covers all the basics of estate planning. Or contact the Law Office of Constance A. Aschenbrenner and make an appointment to discuss setting up your power of attorney, or review and revise your existing powers of attorney.