The Power of Attorney: Why It Matters

The Power of the Power of Attorney Document

It’s normal for people who are sick or disabled to ask for help from their loved ones. Some people, however, require a little more help to get things accomplished, such as making important financial or medical decisions. In these instances, one document gives a person the power to decide on their loved one’s behalf—a power of attorney.

What is a Power of Attorney?

A power of attorney or POA is a legal document that gives a person of your choosing the power to act on your behalf in case you are ill, disabled, or absent and cannot sign necessary legal documents.

You (the principal) can only draw up a POA and choose someone to enact it (the agent or attorney-in-fact) when you have sufficient mental capacity. This is a crucial stipulation because the principal must understand the power the document holds over their life and assets. This also means that if you are already ill or incapacitated, your family or loved ones will not be able to draw up a POA on your behalf.

Once a POA is effective, your attorney-in-fact can sell your property, handle your bank accounts, or make medical decisions for you. A POA has its limits, though, depending on the type you’ve drawn up.

What are the Types of POAs?

There are four types of POAs, each of which provides various degrees of responsibility for the attorney-in-fact.

  • General POA

Also called a conventional POA, a general POA gives your attorney-in-fact the authority to make decisions based on your behalf from the moment you sign the document until you revoke the POA, become incapacitated, or pass away.

  • Durable POA

Similar to a general POA with one exception, a durable POA takes effect the moment you sign a document and stays in effect for your lifetime. This means that even if you become incapacitated, your attorney-in-fact still has the authority to make decisions on your behalf.

  • Springing POA

A springing POA is similar to a will in the sense that it takes effect once a specific event occurs. For example, you draw up a springing POA that states that your eldest child becomes your attorney-in-fact the moment you turn 80 years old. This type of POA must be crafted carefully to avoid problems in identifying the circumstances that put it into effect.

  • Limited or Special POA

A limited or special POA gives the attorney-in-fact of your choosing the authority to act on your behalf only for specific purposes. For example, you may draft a limited POA that allows them to sign a deed of sale for your house while you’re away and unable to do it yourself.

Who Can Be Assigned as the Attorney-in-Fact?

You can assign any person to be your agent or attorney-in-fact. That person doesn’t have to be a lawyer. They can be your spouse, your eldest child, or your best friend.

However, a POA is a powerful document and your attorney-in-fact can sell all your properties or manage your bank account. If the agent you chose mishandles your POA, you could end up bankrupt. So, the person you assign as your attorney-in-fact must be someone you implicitly trust to make the best decisions for you.

Typically, if the person drafting the POA is elderly, they assign their adult child as the attorney-in-fact. Their youth is an advantage for when they need to relieve their aging parents the burden of managing their assets. If an aging person names their spouse as their agent, the spouse might be suffering from similar incapacities, rendering them unable to carry out the POA.

This is also why it’s crucial to name a successor attorney-in-fact in case the primary agent cannot enact the document due to a disability or because they resigned or passed away. Either way, it’s a good idea to consult with a lawyer that specializes in estate planning to help you draft a POA that ensures your wishes are carried out.

What Happens if You Don’t Have a POA?

A lot of people don’t understand how important POAs are, so they’re not prepared and don’t have one drafted. However, things happen unexpectedly. You may get in an accident or develop a sickness that will leave you unable to decide how you want your assets handled. In instances like these, a court may appoint a “guardian” or “conservator” of your assets and your family will not have any control over them.

Secure Your Future

Drafting a document as important as a POA can be complicated. This is why Miller & Steiert, P.C. is ready to help. Our experienced estate planning attorneys can help you draft legal documents to protect your interests.

For more inquiries about POAs and other legal services, call us at 303-798-2525.

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