If you needed to make a critical decision about your personal finances, your business, or your health care, but you were unable to do so, whom would you want to have making the decision for you?
That actually is much more than a hypothetical question. As we age, it is inevitable for our mental and physical capabilities to diminish, and for many people, circumstances eventually dictate that somebody else has to do their thinking for them.
That is why it is so important to have a legal agreement known as a Power of Attorney (POA).
A Power of Attorney document is a written authorization that allows you, as the named principal, to formally appoint a trusted individual to make decisions and take actions on your behalf. The premise of a Power of Attorney is that if you become physically or mentally incapacitated, either temporarily or permanently, your loyal surrogate could step in for you and represent your best interests.
The person you select, usually a spouse, adult child, another relative, or close friend, is then designated as your agent or “attorney-in-fact” within the scope of the agreement. This means they are expected to make informed, good-faith decisions involving such vital issues as health care options, business transactions, insurance policies, tax returns, or other legal or financial matters.
A Power of Attorney document provides great peace of mind. It assures you that everything you have worked for during your life will continue to be managed according to your wishes, even though you are unable to handle the decision-making yourself. Without a POA, your assets and personal dealings could end up being managed by a court-appointed representative who knows nothing about your intentions. Avoiding those judicial proceedings also can save your estate a good amount of money.
Different types of POA documents
There are many variations of Power of Attorney agreements, and we handle them all at Cordell Planning Partners.
When you prepare your POA, it is up to you, as the principal, to determine which powers your assigned agent (or agents) will have on your behalf. Typically, POA documents grant agents a variety of powers, by their authority also may be limited to specific responsibilities.
For example, you can decide that your agent will deal with only one particular issue, such as selling a piece of real estate or maintaining a safe-deposit box, or you may prefer to designate your spouse to make medical decisions for you while giving a friend the Power of Attorney for your business-related decisions. This agreement is known a limited Power of Attorney or “special” POA.
On the other hand, a general or full Power of Attorney gives much broader powers to your chosen agent to act for you. Those powers can encompass a wider range of personal financial transactions, business dealings, health care decisions, and much more. A general Power of Attorney agreement is often included in an estate plan.
Another valuable alternative is the Durable Power of Attorney. A Durable Power of Attorney goes beyond a traditional one because it seamlessly remains in effect if the principal becomes mentally or physically incapacitated. Because such an arrangement ensures that the principal’s affairs will be handled as he or she would have wanted, Durable Powers of Attorney are very popular.
When creating a Power of Attorney, carefully choose the person — or people — you will trust to make decisions about your assets and affairs when the time comes. Then consider which specific responsibilities your agent(s) will have.
The experienced attorneys at Cordell Planning Partners can offer insightful advice to help you confidently prepare the best POA documents for your family and your personal priorities.
Looking further ahead
The principal can choose to revoke or change the Power of Attorney at any time. Once your POA is written, you should revisit the documents regularly to make sure they still reflect your wishes.
That is especially true with a Durable Power of Attorney, knowing it will remain in effect should you become incapacitated. Some POA documents stipulate that they cannot be activated until a doctor you designate has made the professional assessment that you are no longer capable to make your own decisions.
Cordell Planning Partners will help you design a power of attorney agreement to ideally address whatever issues and concerns you are facing.
The regulations for POAs vary from state to state, but our attorneys are able to offer smart solutions to help protect your future, wherever you live.
To learn more, contact us and receive a complimentary estate plan analysis.