Estate planning encompasses many elements. One of them is having a power of attorney.
A power of attorney is an important part of an estate and health care plan. It allows you to designate someone you trust to make financial, legal, or medical decisions on your behalf if you become unable to make those decisions yourself.
A power of attorney can provide peace of mind and help prevent confusion during an emergency. Without appropriate documents in place, family members may have to seek court intervention to obtain authority to manage certain aspects of your affairs.
What Is a Power of Attorney?
A power of attorney is a legal document that gives another person, known as an agent or attorney-in-fact, authority to act on your behalf. The person creating the document is generally called the principal.
The authority granted to an agent depends on the type of power of attorney. Some documents provide broad authority over financial matters, while others are limited to specific transactions or decisions.
Power-of-attorney laws vary by state, so it is important to ensure that the document meets the legal requirements where it will be used. There are several types of power of attorney. Here is a look at them.
Financial Power of Attorney
A financial power of attorney can be particularly useful if an illness, injury, or other circumstance prevents you from managing your finances. A financial power of attorney allows an agent to handle financial and property-related matters for you. Depending on the document, an agent may be authorized to do the following:
- Access and manage bank accounts
- Pay bills and other expenses
- Buy or sell property
- Manage investments
- File or handle tax matters
- Manage business interests
- Apply for government benefits
- Handle insurance matters
- Manage other financial transactions
Health Care Power of Attorney
A health care power of attorney allows you to designate someone to make medical decisions for you if you cannot make or communicate those decisions yourself.
Your agent may be able to communicate with health care providers, review medical information, and make treatment decisions according to your wishes and applicable state law.
A health care power of attorney is often used alongside an advance health care directive, which can document your preferences regarding medical treatment and end-of-life care.
Durable vs. Nondurable Powers of Attorney
One important distinction is whether a power of attorney is durable.
A durable power of attorney generally continues to be effective even if a person later becomes incapacitated. This can make it an important component of incapacity planning.
A nondurable power of attorney generally ends when the principal becomes incapacitated or dies, although the precise rules depend on state law and the document’s terms.
Who Should You Choose as Your Agent?
Choosing an agent is one of the most important decisions when creating a power of attorney. The person should be trustworthy, responsible, and capable of handling the authority granted under the document.
An agent does not necessarily have to be a family member. Depending on the circumstances, you may choose a spouse, adult child, relative, friend, or someone else you trust. You should also consider naming a successor agent who can act if your first choice cannot or will not serve.
Why Is a Power of Attorney Important?
A power of attorney can help ensure that someone you trust has the legal authority to act when you cannot. It can reduce delays, provide clear instructions, and help your family avoid unnecessary court proceedings.
However, a power of attorney is only one part of a comprehensive estate and health care plan. Depending on your circumstances, your plan may also include a will, trust, advance health care directive, beneficiary designations, and other documents.
Because power-of-attorney requirements and legal effects differ from state to state, consider working with an estate planning attorney to ensure your documents accurately reflect your wishes and comply with applicable law.
FAQs
Q: Does a power of attorney give an agent complete control over my affairs?
A: Not necessarily. The authority given to an agent depends on the type of POA and the powers specifically granted in the document. You can often limit an agent’s authority to certain matters, transactions, or periods of time.
Q: Does a power of attorney remain valid after I become incapacitated?
A: A durable power of attorney generally continues after the principal becomes incapacitated. A general or nondurable POA typically does not. The specific rules depend on state law and the language of the document.
Q: Can I have more than one power of attorney?
Yes. You may have different POAs for different purposes. For example, you could have a financial POA for managing your finances and a medical POA for health care decisions. However, the documents should be carefully coordinated to avoid conflicts.
Q: Can I revoke a power of attorney?
A: Generally, you can revoke a POA if you still have the legal capacity to do so. You may also create a new POA that replaces an earlier document. State law may establish specific requirements for revocation.
Q: What happens if I become incapacitated without a power of attorney?
If you become unable to manage your affairs and have not appointed someone to act for you, your family may need to seek court authority to manage certain financial or personal matters. The process can be time-consuming and costly.
Q: Is a power of attorney the same as a will?
No. A power of attorney generally allows someone to act on your behalf while you are alive, whereas a will controls the distribution of certain assets after your death. They serve different purposes and can be important parts of an estate plan.
Contact Us Today
A medical issue can happen at any time. Do not wait until a crisis forces decisions out of you.
The Law Office of Philip M. Flanigan, P.C. can help you secure your health care and financial future. We can create legal documents that meet your needs, meet California’s legal requirements, and give you peace of mind. To schedule a consultation, fill out the online form or call (559) 517-3948.