At some point you’ve likely heard the phrase “Power of Attorney,” but what does it really mean? A power of attorney (POA) is a legal instrument that give another person legal authority to make decisions on an individual’s behalf if they are physically incapacitated or mentally incompetent. The individual chosen to act on the individual’s behalf is referred to as an “agent.”
Why do I need one? Well, because life happens. An accident, long-term illness, or unexpected absence out of the country can occur at any time and a POA can assist your loved ones in carrying on in your absence. Yes, it’s difficult to think about, but if something happens to you, what happens to your assets or your loved ones? By having a POA created ahead of time, an unexpected event won’t cause legal hardship and the appointed agent can carry on with their responsibilities.
How does it work? When a POA is granted, the authorized agent is legally responsible for making decisions on behalf of the grantor in a number of legal matters. There are also different types of Powers of Attorney that can be enforced based on the type decision being made.
What are my options? A nondurable Power of Attorney often comes into play in real estate transactions, or when someone elects to delegate their financial affairs to an agent during an extended absence. However, a nondurable POA is limited in time, scope and action.
A durable Power of Attorney allows another party or appointed agent, to make decisions and act on an individual’s behalf for financial affairs and/or health care decisions until that authority is revoked. You can revoke your power of attorney by specifying an expiration date on the document. Financially, a POA is exceedingly useful. The agent can pay bills, write checks, make investment decisions, file taxes, buy or sell real estate and other hard assets. In addition, the agent has authority to arrange the distribution of your retirement benefits.
A Healthcare Power of Attorney also known as a “healthcare proxy,” is combined with a Living Will that allows a designated agent to make certain decisions regarding medical issues should that individual become incapacitated or mentally incompetent. The Healthcare POA also sets forth guidance to both the designated agent and the individual’s medical providers as to what the individual’s wishes are pertaining to the level of care they want, especially if they are suffering from a terminal illness, coma, or persistent vegetative state.