A Power of Attorney (POA) document is crucial for every estate plan. All states recognize powers of attorney, but rules and requirements will differ from state to state. Still, some parts may be beneficial to all.
What Does Power of Attorney Mean?
Power of Attorney allows one or more individuals the legal authority to act as your agent or proxy on your behalf. Depending on which POA you choose, the agent’s power may be limited to a particular activity, such as a real estate sale, or cover broader applications.
A Power of Attorney may give permanent or temporary authority and be invoked immediately or activated by a future event, such as mental or physical disability. The latter is known as a “springing” Power of Attorney. Powers of Attorney may be rescinded, but most states will require written notice of revocation to the named individual or entity.
Nondurable Power of Attorney
Some Powers of Attorney are nondurable for convenience, especially in the case of a single transaction, such as a property sale or registration of a new vehicle. Your agent may conduct the sale of a boat or a home described in the POA document.
Suppose you are traveling abroad or know you cannot transact this business. In that case, a nondurable power of attorney can be incredibly beneficial. Once the time period or transaction is complete, the nondurable power of attorney terminates.
General Power of Attorney
A general power of attorney permits the agent to deal with matters on your behalf that state law allows. Under such an agreement, your agent may sign checks, handle bank accounts, sell property, manage assets, and file taxes when you are unable. This POA has a wide latitude of authority. Therefore, there needs to be coordination between you and your agent to ensure your best interests are always represented.
Durable Powers of Attorney
The better-known Powers of Attorney are durable and take effect upon incapacitation. The word “durable” means the powers will remain intact even when you can no longer manage your affairs. There are two types of Durable Powers of Attorney. One handles financial matters, and the other manages medical affairs, called an Advance Healthcare Directive.
Financial Power of Attorney
This durable power of attorney permits an agent to manage your financial and business affairs, similar to a general power of attorney. When you become incapable of managing your affairs, the agent’s responsibility is to carry out your wishes to the best of their ability.
Suppose the financial power of attorney is also a beneficiary of your estate. In that case, they must act with great care to avoid misinterpretation of intent. This document is not just for seniors. An unforeseen illness or unfortunate accident can render a healthy, younger individual incapacitated and needing financial assistance.
Advance Healthcare Directive
A California Advance Healthcare Directive, formally known as a Durable Power of Attorney for Healthcare, permits a designated person or agent to make healthcare and medical decisions according to your specific instructions or their best understanding of your wishes. Again, having an Advance Healthcare Directive is not only relevant to seniors. An unforeseen illness or accident can render a healthy, younger individual incapacitated, so an Advance Healthcare Directive is a crucial estate planning document.
Okay, but Why Do I Need Powers of Attorney?
The consequences of not having these documents are incredibly stressful and entirely avoidable. It’s that simple.
Without these Powers of Attorney in place, a court may need to appoint individuals to act on your behalf upon your incapacitation. These individuals are considered conservators, guardians, or committees, depending on your state laws. This type of court intervention is often expensive, time-consuming, and is a public proceeding. Most people prefer to keep their matters private by implementing powers of attorney documents in their estate plans to avoid conservatorships altogether.
What to Do
The best way to establish powers of attorney is to locate a qualified estate planning attorney. They can help you assess which power of attorney is necessary for your unique situation. They also understand the criteria for identifying the individuals or agents to represent your interests. Delegating general and limited powers to agents can create family strain during the planning stages. An estate planning attorney is familiar with the nuances of these family issues should they arise and how to move forward for all concerned. The most significant benefit of having these matters settled before incapacitation or death is allowing a family to care or grieve for their loved one instead of being bogged down in logistics. We hope you found this article helpful. Please get in touch with us today at 877-585-1885 to schedule a free consultation to discuss your legal matters.
Thanks for reading.
Christopher E. Botti, Esq., Certified Specialist in Estate Planning, Trust and Probate Law