Life is full of the unexpected. But just because the future is unpredictable does not mean adults cannot prepare for what lies ahead. Estate planning is important, and establishing power of attorney can be essential for men and women looking to protect their financial resources and other assets.
What is power of attorney? A power of attorney, or POA, is a document that enables an individual to appoint a person or organization to manage his or her affairs should this individual become unable to do so. According to the National Caregivers Library, POA is granted to an "attorney-in-fact" or "agent" to give a person the legal authority to make decisions for an incapacitated "principal." The laws for creating a power of attorney vary depending on where a person lives, but there are some general similarities regardless of geography.
Why is power of attorney needed? Many people believe their families will be able to step in if an event occurs that leaves them incapacitated and unable to make decisions for themselves. Unfortunately, this is not always true. If a person is not named as an agent or granted legal access to financial, medical and other pertinent information, family members' hands may be tied. In addition, the government may appoint someone to make certain decisions for an individual if no POA is named.
Just about everyone can benefit from establishing an attorney-in-fact. Doing so does not mean men and women cannot live independently, but it will remove the legal barriers involved should a person no longer be physically or mentally capable of managing certain tasks.
Power of attorney varies. Power of attorney is a broad term that covers various aspects of decision-making. According to the legal resource 'Lectric Law Library, the main types of POA include general power of attorney, health care power of attorney, durable power of attorney, and special power of attorney. Many of the responsibilities overlap, but there are some subtle legal differences. Durable power of attorney, for example, relates to all the appointments involved in general, special and health care powers of attorney being made "durable." This means the document will remain in effect or take effect if a person becomes mentally incompetent. Certain powers of attorney may fall within a certain time period.
What is covered? An agent appointed through POA may be able to handle the following, or more, depending on the verbiage of the document: banking transactions, buying/selling property, settling claims, filing tax returns, managing government-supplied benefits, maintaining business interests, making estate-planning decisions, deciding on medical treatments, selling personal property or fulfilling advanced health care directives
Although a power of attorney document can be filled out and an agent appointed on one's own, working with an estate planning attorney to better understand the intricacies of this vital document is advised.