Do I Need A Power Of Attorney?
One of the most important and powerful estate planning documents that you can create is a Power of Attorney.
What is a Power of Attorney?
A Power of Attorney (POA) is a legal document that gives another person the authority make decisions for you and act on your behalf. This generally includes the power to make financial and legal decisions.
Attorney in fact
The person granting the power of attorney to another individual is called the principal. The person who is granted the legal authority to act on the principal’s behalf is known as the agent or attorney in fact.
This means that this individual can purchase or sell property, pay bills, open bank accounts, and also acquire and pay off debt in your name. Essentially, they are legally acting as you and on your behalf, making financial decisions and managing your affairs.
Who Needs a Power of Attorney?
A power of attorney has traditionally been considered an essential document for the following people:
Seniors
Individuals with Chronic Illnesses or Disabilities
Business Owners
Expatriates
Anyone Seeking to Avoid Court-Appointed Guardianship
But, life can have unexpected twists that can cause any individual to need someone else to act in the event of an emergency. Given this possibility, a Power of Attorney is recommended for:
ANYONE OVER THE AGE OF 18
How long does a power of attorney last?
A Power of Attorney document will be in effect until the principal dies or revokes it.
What makes a power of attorney valid?
The principal must be competent and of sound mind.*
The agent must be competent, of sound mind, and at least 18 years of age.
The power of attorney must be signed and notarized in the presence of witnesses.
*This is one of the most important reasons to create a power of attorney while you are of sound mind. In the event that you do become incapacitated and unable to make decisions for yourself, even your most trusted family members or caretakers cannot assume or create a power of attorney for you. At this point, they will most likely need to go to court to assume guardianship over you and your affairs.
Durable Power of Attorney vs Springing Power of Attorney
Durable - A Durable Power of Attorney is in effect immediately after it is executed and remains in effect after the principal becomes incapacitated
Springing - A Springing Power of Attorney only goes into effect if, and when, the principal the becomes incapacitated.
Durable Power of Attorney
A Durable POA is one of the most important and powerful Advance Directive documents that you could have. A properly constructed Power of Attorney with the right agent can protect you, your loved ones, and your estate, should you ever become incapacitated and unable to make decisions for yourself.
What makes a Durable POA different than any other Power of Attorney is that the agent can carry on the principal's affairs such as paying the mortgage or rent as well handling as any other monthly expenses, including utility bills, auto insurance, and health insurance payments before and after the principal becomes incapacitated. With a Durable POA, the agent would also have the authority to use the principal's money and assets to pay for the principal's medical expenses.
A Durable Power of Attorney will also ensure that your financial affairs are handled in such a situation. A Durable POA is not one size fits all, so consulting an experienced Estate Planning Attorney can give you the peace of mind knowing that your Durable POA is valid and right for your needs.
One advantage of the Durable Power of Attorney is that it can spare your family and loved ones from having to go to court in order to gain the right to act as your agent in your place.
What If I Don't Have a Durable Power of Attorney?
If you don't have a durable Power of Attorney in place, your family or agent will most likely have to go to court to gain guardianship over you, and in most cases you would need to be there whether you are aware of what is happening or not. Before a final determination is made on whether your chosen family member or agent can gain guardianship over you and your estate, the court might appoint a temporary guardian which may not be anyone you know. A judge will ultimately decide whether a family member or caretaker can be your guardian or whether to appoint a third party individual to act on your behalf.
Springing Power of Attorney
Even with a Springing POA, you might have to go to court or through a legal process to prove that the principal is incapacitated and unable to make decisions.
The one thing to consider however with a Durable POA is that the agent does assume the powers to act on your behalf immediately. You want to make sure this is an individual who can be trusted both before and after you would be incapacitated and unable to make decisions for yourself
Are a Durable and a Medical Power of Attorney the Same?
This is an important distinction you should be aware of. While a Durable Power of Attorney grants an agent the power to access and operate the principal's finances and property, it does not grant an agent the authority to make medical decisions on behalf of the principal.
Healthcare Proxy
A Medical or Healthcare Power of Attorney, separate from a Durable POA, would need to be created so that you can designate a person, who would be known as your Healthcare Proxy, to make medical decisions on your behalf. Additionally, you can also designate what types of medical treatment you would, or wouldn't want, in a given scenario such as whether to continue life support or have a potentially risky medical procedure performed.
Other Types of Power of Attorney
There are other, more limited types of Powers of Attorney such as a General Power of Attorney that gives an agent the power to manage your business and financial affairs up until an individual becomes incapacitated, or a Limited Power of Attorney that grants an agent the power to act on your behalf in a limited manner, such as completing a business transaction or real estate closing.
Making Your Choice
Choosing a Durable POA Agent is one of the most important estate planning decisions you can make. You want to make sure this is a person you can trust to make decisions in your best interest, and according to your wishes, when you are not in a position to do so yourself.
Some factors to consider include:
Trustworthiness: Choose someone who you know is honest and reliable.
Competence: Select someone who is capable of managing your affairs. Having the necessary skills and knowledge to handle financial and medical decisions effectively can be crucial.
Availability: The person you choose should be willing, able, and available to act on your behalf when needed.
Conflict of Interest: Seek an agent that will prioritize your best interests and will not have a conflict of interest that could affect their decision making.
Can I use forms available over the internet to create a Durable POA?
Online forms are available to create a Power of Attorney but it is not recommended that you do so. All Durable POA forms will have some things in common but they may not take into account how the provisions of Durable POA will vary according to state law.
Also, a Durable Power of Attorney is not a one size fits all type of document. You may have some particular wishes regarding certain circumstances and needs, or the degree to which your agent is allowed to act on your behalf.
Drawing up a Power of Attorney in this manner runs the risk of having the document invalidated under state law. This could result in a court appointed guardian or conservator to oversee your finances.
Seek legal advice before giving away your legal authority
If you are considering drawing up a Durable POA but not sure who to select, an experienced estate planning attorney could assist you in making such a decision. An experienced estate planning attorney knows of many possible scenarios that could arise. This could help you to decide who the best fit would be to act as your agent.
Attorney and founder of the Jelks Law Firm, Amanda Jelks, strongly recommends against any type of DIY Estate Planning. The risk of having a power of attorney invalidated or not legally recognized can be especially devastating if your chosen agent is not able to act when you most need it.
Contact an experienced Attorney Today!
A qualified estate planning attorney will know the right questions to ask you so that you can create a Durable Power of Attorney that suits your needs and offers you peace of mind in the event of a worst case scenario.
If you have questions on creating a Power of Attorney, Durable POA, or anything related to estate planning, call Jelks Law Firm today.