What is a power of attorney and what is the purpose?
We all like to make our own decisions but unfortunately, there may come a time when we cannot. That is when a power of attorney becomes critical, according to Lancaster Online in “Why you’re never too young for a power of attorney.” A power of attorney is among a handful of estate planning documents that help with decision making, when a person is too ill, injured or lacks the mental capacity to make their own decisions.
There are three basic power of attorney documents: financial, limited and health care.
You’re never too young or too old to have a power of attorney. If you don’t, a guardian must be appointed in a court proceeding, and they will make decisions for you. If the guardian who is appointed does not know you or your family, they may make decisions that you would not have wanted. Anyone over the age of 18 should have a power of attorney.
It’s never too early, but it could be too late. If you become incapacitated, you cannot sign a POA. Then your family is faced with needing to pursue a guardianship and will not have the ability to make decisions on your behalf, until that’s in place.
You’ll want to name someone you trust implicitly and who is also going to be available to make decisions when time is an issue.
For a medical or healthcare power of attorney, it is a great help if the person lives nearby and knows you well. For a financial power of attorney, the person may not need to live nearby, but they must be trustworthy and financially competent.
Always have back-up agents, so if your primary agent is unavailable or declines to serve, you have someone who can step in on your behalf.
You should also work with an estate planning attorney to create the power of attorney you need. You may want to assign select powers to a POA, like managing certain bank accounts but not the sale of your home, for instance. An estate planning attorney will be able to tailor the POA to your exact needs. They will also make sure to create a document that gives proper powers to the people you select. You want to ensure that you don’t create a POA that gives someone the ability to exploit you.
Any of the POAs you have created should be updated on a fairly regular basis. Over time, laws change, or your personal situation may change. Review the documents at least annually to be sure that the people you have selected are still the people you want taking care of matters for you.
Most important of all, don’t wait to have a POA created. It’s an essential part of your estate plan, along with your last will and testament.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.
Reference: Lancaster Online (May 15, 2019) “Why you’re never too young for a power of attorney”