Most people understand the importance of a will for looking after your affairs when you’re unable to do so, but few understand the equally important power of attorney. A will may be the best way to help you sort out your personal affairs after you’ve passed away, but a power of attorney can help to ensure your affairs remain in order should you become unable to manage them while you’re still living. It can give you the peace of mind that in an emergency, someone you trust will have the authority to make important decisions on your behalf. On the other hand, if you become incapacitated without a power of attorney, your family may have to endure an elongated and expensive legal battle to get a court to appoint a guardian for you.
Power of Attorney 101
In the simplest terms, power of attorney is a document that allows you to grant legal authority to a certain person or group of people, enabling them to make decisions on your behalf. This person, commonly known as the agent, may then undertake decision making on your behalf whenever you are unable to do so. For example, if you become incapacitated with severe late stage Alzheimer’s disease or enter a coma, the agent can look after your estate to ensure the wellbeing of you and your loved ones.
Generally speaking, the agent can use any powers of attorney required by government agencies. However, there is a virtually limitless range of power of attorney options, meaning what the agent can or cannot do is largely up to you. Power of attorney can be either general or specific, meaning that it may grant broad responsibilities or very specific authority, all depending on how it is written. They can be used to manage property, hire attorneys, change a trust, alter retirement accounts, and enter into other legal arrangements on your behalf.
There are many common concerns surrounding power of attorney, but most of them can be dispelled by understanding that it only grants the powers you allow. Power of attorney cannot enable the agent to make or alter a living will, or to make a person they represent take any action against their will. It is terminated following death, divorce, declared termination by the represented person, or a court order. It may become effective immediately (known as durable) or only initiated given specified circumstances (known as springing), all depending on how the document is written.
Power of Attorney Advice
As attorney Michael Burstein, founder of Burstein Law advises, selecting the person to represent you is an incredibly important decision. For obvious reasons, it’s crucial that you choose someone who you believe will act in your best interests. The person you choose should be trustworthy with your important financial and legal decisions. Above all else, never select someone with financial problems. Although well-intentioned, it’s not uncommon for these people to embezzle funds and then find they’re unable to pay you back.
Before you appoint someone, be sure you discuss the decision with them and be certain they agree to act on your behalf. Once you’ve made a selection, it’s a good idea to appoint a backup agent, who can help ensure that if the first agent refuses to act or has passed away, then your power of attorney can still be carried out. It’s also important to arrange for whether or not the agent will require a fee. Power of attorney costs are often little-to-nothing because family members are usually willing to perform as an agent without charge, but professionals like lawyers and accountants will typically require payment.
Making Legal Decisions
You should also always consult with an attorney when creating a power of attorney document. When dealing with complicated legal jargon like “statutory gift writer” you’re better off dealing with an experienced expert that can help explain these terms to you. Like with any legal document, don’t sign anything if you’re not certain you understand it. Although creating a power of attorney can be a complicated and emotional process for you and your family, little else can offer you the peace of mind of knowing that your affairs will remain in good order even if the worst should happen.
If you have had any experience with POAs please share it in the comments. We would love to hear from you!