Choosing someone you give authority to act on your behalf is a serious legal decision. You will need to create a legal document, known as a power of attorney, appointing an agent to act for you. This agent can be a family member, friend, partner, or anyone else you trust to manage your affairs.
There are many different types of power of attorneys covering a wide range of different matters. You will need to choose the one that best fits your specific needs and situation.
Power of attorneys can address a variety of situations. You can create a POA for a single transaction (for example, authorizing your brother to sell your car for you while you’re out of town) or a long-term, “durable” one that will allow someone to handle your financial or health matters if you ever become incapacitated.
Durable POA: It’s a good idea for pretty much anyone, regardless of age or circumstance, to create a durable POA—meaning a POA that remains in effect even if you become incapacitated. It’s a way of being prepared for eventualities, hard as they might be to contemplate. In fact, most estate plans include two separate durable POAs, discussed in more detail below.
Durable POA for Finances: A financial POA gives your agent the authority to handle financial matters for you after you’re no longer able to attend to these tasks. For example, your agent might use a financial POA to deposit your Social Security checks for you, file your taxes, or maintain your retirement account.
Durable POA for Health Care: A health care or medical POA allows an agent to manage your medical care. This document actually goes by many names. Your state might also call it a “health care proxy,” “health care directive,” “advance directive,” or similar term. (To make matters even more confusing, some states combine a health care POA with a separate document called a “living will,” which sets out your wishes for the type of medical treatment and end-of-life care you want to receive.)
Non-Durable (Limited Powers) POA: In contrast, a non-durable POA ends if you become incapacitated. This type of POA tends to be limited in scope—used for a one-time task or a finite period of time. For example, if you need your friend to handle all of your financial matters (like insurance paperwork and bank deposits) while you’re recovering from surgery, you could use a non-durable POA for this purpose; this POA would essentially have an expiration date.
Springing POA: A springing POA is a power of attorney that doesn’t “spring” into effect until a triggering event. Some people, particularly those who are uncomfortable with the idea of giving up control, want to use a springing durable financial POA that is effective only if they’ve been declared incapacitated by a third party. While this might seem attractive, a springing POA can have logistical drawbacks. The better course of action is usually to use a durable financial POA, name an agent you trust completely, and tell the agent the document is to be used only if you become incapacitated.
Why Should I Create a Power of Attorney?
Assigning a Power of Attorney is a safe and practical way to protect and manage your estate, your late-life care, and more. In the event that you become ill or are unable to take on the task of comprehensively handling your estate affairs, making financial decisions, or making choices for your long-term care, your POA will take on the responsibility of making decisions on your behalf.
It is important to appoint an agent that you trust to fully manage your care, capital, and other assets. You have the ability to appoint a single agent or multiple agents. You can direct them to work together to make decisions or provide them with specific instructions on what choices you would like to be left for them to make. If you have any questions or are ready to take the next step in planning for your future, contact our law office today.
Who Should I Appoint as an Agent?
When it comes to appointing an agent for your POA you will want to choose someone you trust. Many individuals will appoint their spouse, child, or children but it is not necessary for your agent to be a relative. While you can appoint anyone you want, it may be in your best interest to appoint someone who is able to travel to your location easily in the event they need to be in person to make choices on your behalf. Take time to thoroughly explain your wishes and desires to your POA agent when you assign them so they know how to best serve you.
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