A power of attorney is a legal document giving one person—the “agent”—the legal power to make legal, financial, or medical decisions for another person. It is one of According to a recent article from Nerd Wallet, “What is a Power of Attorney (POA)? Types, How, When to Use,” the POA lets someone act on your behalf if you are traveling, too sick to act on your own behalf or can’t be present to sign legal documents.
You may name any adult, including your spouse, adult child, sibling, or a trusted friend, to act as your agent under power of attorney. It can be granted to anyone who is a legal adult and of sound mind. Ordinary power of attorney designations dissolve if you become incapacitated. However, durable power of attorney designations remain intact, even upon incapacity.
You can give one person power of attorney or divide the responsibilities among multiple people.
Most people don’t know that power of authority authorizations can be very specific or general, depending on your needs. When having an experienced Tyler estate planning attorney draft a power of attorney, review the desired scope of your agent’s authority, when it should take effect and the desired duration.
If you don’t have a power of attorney and become incapacitated, a court can appoint someone to act on your behalf. However, court intervention turns a private matter into a public proceeding, and you cannot know if the appointed conservator will follow your wishes.
There are several types of power of attorney, and the names of the documents vary by state. The durable power of attorney remains intact, even when you are incapacitated. The ordinary power of attorney becomes moot once you are incapacitated. A dual power of attorney gives power to two people and requires both individuals to sign off on any decisions.
A dual power of attorney may be useful if you have two children, for instance, and you’d like them to make joint decisions for you. Regardless of how many powers of attorney you appoint, you should always name successor agents for each power of attorney, in case the primary person is unable or unwilling to serve when needed.
Another way to allow another person to take over your affairs in the event of incapacity is to place assets in a revocable trust, which allows you to maintain control of the assets while alive and of legal capacity. The trust includes a successor trustee, who takes over in the event you become incapacitated or die.
The successor trustee only has control of the assets owned by the trust, so if the purpose of the trust is planning for incapacity, many, if not all, of your assets will need to be retitled and put into the trust.
A medical power of attorney, also called a health care proxy, is a type of advance directive giving another person to make all health care decisions for you in accordance with your wishes when you are unable to do so. Health care proxy decisions generally cover any type of medical treatment or procedure to diagnose and treat your health. Make sure the person you grant medical power of attorney to is familiar with your wishes and knows what decisions you would want in treatment or for life—supporting measures.
A properly created estate plan will often use both the durable power of attorney and a Revocable Living Trust, when preparing for incapacity. Read more in our article, What Legal Documents are Needed in an Estate Plan?
Sadly, many people fail to have these legal tools created. As a result, when they are incapacitated, the family must go to court to have a person appointed to manage their affairs. This is usually referred to as a “legal guardianship.” The proceeding to obtain a guardianship is lengthy and complicated. Once the guardianship is established, the guardian must file annual accountings with the court documenting how all of the funds are used. The guardian must also post a surety bond, designed to protect assets in case of improper use.
Guardianship and its costs and time-consuming tasks can all be avoided with a properly prepared estate plan, including planning for incapacity with a power of attorney or revocable trust.
Book a consultation with Tyler Estate Planning Attorney Bradley S. Campbell to discuss how to protect yourself and prepare for the unexpected, but possible event of incapacity with a comprehensive estate plan that includes a power of attorney.
Reference: Nerd Wallet (May 10, 2023) “What is a Power of Attorney (POA)? Types, How, When to Use”