Power of Attorney

Why You (and everybody over 18) Needs One

Let’s start with this simple question: Who will act for you, making decision about your finances and health, if you suddenly can’t?

If you’ve already given this scenario some thought, you might have someone mind. Or maybe you have someone in mind for your finances and someone else in mind for your health care decisions. But unless you have it in writing in a legally binding document, the decision as to who will act for you could be out of yours and your family’s hands. Enter the power of attorney (POA).

A POA is a legal document that allows you (the principal) to designate someone else (the agent) to act on your behalf in financial and/or medical matters. This person can make decisions for you if you become incapacitated or unable to manage your affairs.

As you might expect, a financial POA allows your agent to handle your finances if you're unable to do so. This can include paying bills, managing investments, and even filing your taxes. It's particularly useful if you travel frequently or have complex financial affairs.

A healthcare POA, also known as a medical POA, gives your agent the authority to make medical decisions on your behalf if you're unable to communicate your wishes. This ensures that your healthcare preferences regarding treatment, organ donation, end-of-life choices, etc. are respected.

POAs can be structured to be effective under different circumstances. For example:
 

    ►  Conventional or Limited POAs give your agent authority for specific tasks or a limited time.

    ►  Durable POAs remains in effect even if you become incapacitated.

    ►  Springing POAs only becomes effective under specific circumstances, such as if you become incapacitated.

    ►  Medical POAs are limited to healthcare decisions.

Having a POA in place gives you control over who will make decisions for you and ensures that your wishes are carried out. Plus, it can prevent family conflicts and eliminate a lot of unnecessary drama at an already difficult time.

As a POA is a legally binding document, it’s important to be thoughtful and specific when creating it. Obviously, you want to choose an agent(s) who you trust completely. In addition, you want to be specific about the powers you're granting. Consider working with a lawyer to ensure your POA is properly drafted, and that the language is unquestionably clear.

Once you’ve finalized your POA(s), it’s advisable to inform family members and others close to you about your choices to prevent potential conflicts. Bear in mind that these decisions are yours and yours alone to make and, as with all legal documents, you can change or revoke your POA at any time if needed.

Keep in mind that creating a POA isn’t just about naming someone to act on your behalf. It’s also about clarifying your wishes and creating a record of those wishes. Without a legally binding record in the form of a POA, the choices regarding your care, finances and the future of your estate are out of yours and your family’s hands.

DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, investment or legal advice.