A power of attorney can be an important part of planning for the care you want if you become unable to make your own health care decisions. It can also help avoid family arguments or court battles over who should make decisions for you.
Simply put, a power of attorney is a legal document that allows you to appoint someone else to act on your behalf. And, honestly, one of the most important things you can do to prepare for the worst is to assign power of attorney (POA).
Today we will be giving you a complete guide regarding a power of attorney:
Table of Contents
- What is Power Of Attorney?
- Roles and Responsibilities Of A Power Of Attorney
- Types of Power of Attorney
- 5 Steps for assigning Durable Power of Attorney
- When should you get a Power of Attorney?
- Can you Assign the Same Person as Both Durable Financial and Medical Power of Attorney?
- How to Change or Revoke Power of Attorney?
What is Power Of Attorney?
It’s a legal document in which you name another person (your “agent”) to act on your behalf if, and only if, you become incapacitated. There are different types of POA, depending on the purpose for which you are granting it.
Roles and Responsibilities Of A Power Of Attorney
Assigning power of attorney is giving someone permission to make decisions on your behalf in case you are unable to make them yourself. Depending on the type of power granted and your state law, this could include the ability to:
- Pay bills
- Deposit money into or withdraw money from your bank account
- Sell real estate or other assets
- Buy or sell stocks
- Access and review confidential information, such as medical records, bank statements, or tax returns
- Hire others to assist with financial matters, such as a lawyer or accountant
- Make health care decisions, including life-sustaining measures or other types of medical treatment
Types of Power of Attorney
When you assign someone power of attorney (POA), they can legally act in your place. This means they can make decisions and take actions on your behalf to manage your personal affairs or medical care. There are many types of POA, but four of the most common are:
- General POA — the person you assign this type of POA can make decisions about a broad range of legal and financial matters for you
- Durable POA for healthcare — this type of POA allows the person you assign to make healthcare decisions for you if you’re incapacitated.
- A Limited Power of Attorney- limits the powers granted to your agent by specifying what he or she is allowed to do and when they are allowed to do it. For example, if you were going to be out of town for an extended period and needed someone to manage your affairs while you were away, then you could grant your agent limited powers that would allow them to take care of things until you returned home.
- Springing Power of Attorney- A springing durable power does not become effective until a future date or upon a future event, such as disability or incapacity. It is also known as a conditional power of attorney because it becomes effective upon fulfillment of certain conditions. However, this type can be difficult to enforce.
5 Steps for Assigning Durable Power of Attorney
- Get the Power of Attorney Form: You’ll need to get the form for your state.
- Name an Agent: The person you name as your agent is also called an “attorney-in-fact.” Choose someone you can trust to act in your best interests. Remember that your agent will have access to all of your financial accounts, so choose someone who is financially responsible and trustworthy.
- Give Your Agent Specific or Broad Powers: You can grant broad powers that allow your agent to make decisions about all of your finances or you can grant specific powers, like the ability to pay bills or access a particular bank account.
- Sign the Power of Attorney: The document must be signed in front of a witness and a notary public.
- Keep It Safe: Keep copies of the document with your other important papers and give copies to anyone who needs them (your agent, children, relatives, etc.)
When should you get a Power of Attorney?
Many people create a power of attorney when they anticipate being absent or unable to make their own decisions. For example, if you’re going to be traveling abroad for an extended period of time, you might want to grant your spouse the authority to sell your house while you’re gone. Or perhaps you are facing a medical procedure that requires temporary incapacitation, and so you designate your sister as your agent so she can make medical decisions on your behalf during your recovery.
You can understand the situation better with this example –
If Mary decides to go on a trip out of the country for six months, she could give her daughter general power of attorney so that her daughter is able to handle all of Mary’s affairs in her absence like decisions regarding her business or health. It’s important to note that Mary would still retain most of her rights even while giving general POA. If Mary decides at any point during her trip that she wants to revoke the general POA and limit her daughter’s powers, she can do so at any time.
You must be at least 18 years old to assign power of attorney. The person you assign must be an adult and not have been deemed mentally incompetent by a court. If a person is convicted of a felony or has certain other criminal convictions, they may not be able to serve as your agent.
The person granting the power is called the principal and the person receiving the power is called the agent. For example, if you grant your spouse power of attorney over your finances while you are away on business for several months, then you are considered the principal, and your spouse is considered the agent.
Can You Assign the Same Person as Both Durable Financial and Medical Power of Attorney?
Assigning power of attorney is an important step to take if you want to ensure that someone you trust has the ability to make financial and medical decisions for you in the event that you are incapacitated.
You can assign both durable financial power of attorney and medical power of attorney to the same person, but this may not be a good idea.
Durable financial power of attorney allows someone to act on your behalf for all financial matters, including paying bills, filing tax returns, managing investments, and other actions.
A medical power of attorney gives someone the ability to make medical decisions on your behalf should you become incapacitated and unable to make those decisions yourself.
Assigning both powers of attorney to one person is convenient because it means only one person would have the ability to make these types of decisions for you. However, this convenience can come at a price if that person is unable or unwilling to act on your behalf when necessary. It’s much better to assign different people as your durable financial and medical power of attorney so that at least one will always be available when needed.
How to Change or Revoke Power of Attorney?
There are several reasons why someone would want to change a power of attorney document or revoke one altogether. Perhaps the agent who has been given power of attorney over you is no longer available when you need them, or perhaps you’ve found that they aren’t making the best decisions for your interests. Either way, revoking an existing power of attorney document is usually just as easy as creating it in the first place.
Changing the power of attorney is as simple as executing a new document, whether or not the original document is still in effect. If your agent has already acted on your behalf, make sure she understands you have revoked the previous document and that she agrees to act under the new one. You should also give formal notice to anyone who has done business with your agent acting on your behalf.
To revoke power of attorney, you can send a letter to the person acting for you informing them that you no longer wish them to act as your agent and that you are revoking their authority. This letter may be all that’s required if the agent has not yet acted on your behalf. If they have acted, however, it will be necessary to give notice of revocation to any third party with whom they have dealt.
If the power of attorney was recorded in a public office, such as in a register of deeds’ office, then you should file a revocation or change with that office.
When you create a power of attorney, you can choose to end it at a certain time or event. For instance, if you are going to be out of town for several months and want someone to pay your bills while you are gone, you might designate that person as your temporary agent until you return. Or if you are going into a nursing home for an extended period of time and want someone to take care of your finances while you are away, the document might name an agent only until you leave the nursing home.
If you named more than one agent and want to remove one, send notice to that person and everyone who has been notified about the power of attorney. If the document states that more than one agent is required to make decisions on your behalf, then only those agents remaining have authority.