If you ever become mentally or physically incapacitated, who will make medical decisions for you and handle your financial affairs? What if you need someone to sign important legal documents for you because you'll be away at the time of a large transaction, like the sale of your home? For situations like these, there is a valuable planning tool – the power of attorney.
A power of attorney is a legal document giving someone else the authority to act on your behalf. The person who makes the power of attorney is called the "principal," and the person given the authority to act for another is called the “agent” or “attorney-in-fact.” The agent will have control over your business, financial or health matters and be able to make legal decisions for you.
A power of attorney can give the agent broad authority (for example, it can grant power over all your property), or you can limit an agent’s power to manage only specific assets or handle a certain transaction.
Different Kinds of Powers of Attorney
There are several kinds of powers of attorney, including the:
• Nondurable power of attorney. This lets you appoint someone to handle your business and financial affairs. It is commonly used to give someone temporary power. For example, you may want to give someone power to handle your business affairs while you are away on vacation. A nondurable power of attorney ends when you die or become mentally incompetent, revoke the power of attorney or on an expiration date written in the document.
• Durable power of attorney. This is like a nondurable power of attorney in that it lets you appoint someone to handle your financial affairs, except that a durable power of attorney stays valid even if you become mentally or physically incapacitated. A key benefit of a durable power of attorney is that it can save your family the expense and inconvenience of a court having to appoint a guardian (called a conservator in some states) for you if you become incapacitated or disabled – since you have already appointed someone to manage your affairs, a court procedure won't be necessary.
• Springing power of attorney. This becomes effective at a later date and upon the happening of a certain event. Usually the event is your serious illness or disability. A springing power of attorney will usually provide that a doctor (or doctors) will determine whether you can still handle your financial affairs. If doctor(s) determine that you are not competent to handle your own affairs, the springing power of attorney "springs" into effect. Like a durable power of attorney, a springing power of attorney can help you plan in case of incapacity or disability caused by a serious illness like Alzheimer's disease or a major accident. By appointing an agent in advance to manage your financial affairs in case of incompetence or disability, a court guardianship proceeding won't be needed.
• Durable power of attorney for health care (some states call these by a different name, such as a "Health Care Proxy"). This lets you appoint someone to make health care decisions for you if you are incapacitated and cannot make them yourself. The decisions can cover almost all medical matters, including giving consent for hospitalization and surgery.
Choosing The Agent
One of the most important decisions when making a power of attorney is choosing who will serve as your agent or attorney-in-fact. Despite being called a "power of attorney," the person you select does not have to be a lawyer.
For financial decisions, most people select their spouse as their agent. If there is none, then a child, sibling or close friend is often selected. When choosing the person to whom you will give power of attorney, make sure he or she is trustworthy and skilled at handling money. If you have no family members or friends you trust to make your financial decisions — which will include cashing checks and investing your money — you can give power of attorney to an accountant or lawyer.
Most people also name as their health care power of attorney a spouse or child. Whoever you name should be aware of your medical situation and wishes about treatment you might need. You should also name a second person in case the first person is unable or unwilling to serve when the need arises.
Making A Power of Attorney
There are specific rules for making a power of attorney. These rules vary between states. Many states require the power of attorney to be signed before a notary or a certain number of witnesses, with special rules about who can be a witness. Not following the law's requirements could make a power of attorney invalid.
Revoking A Power of Attorney
Powers of attorney can be revoked at any time while you are legally competent. If you revoke a power of attorney because you do not like the way the agent is doing things, or for another reason, you should notify banks and other institutions you deal with of the revocation. It is also usually good to prepare a new power of attorney.
Powers of attorney provide flexibility and are very effective planning tools. They will help make sure your financial affairs and medical decisions are made by the people you want if you ever become incapacitated. They are also very useful in letting you select someone to act for you on a temporary basis if this is ever needed. For help making a power of attorney, please call us. We can assist you in many ways, including advise you about which powers to give to the agent, help you select the agent, explain to the agent his or her legal duties to you and help make sure your power of attorney is prepared in accordance with the law.
Contact an attorney at Triscaro & Associates today. Please call us for all your legal needs. We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.