Powers of Attorney
What is Power of Attorney?
Even though it contains the word "attorney", this document does not give power to your lawyer. Attorney in this case refers to the 14th century Latin definition "one appointed by another to act in his place". With this legal document, you designate an agent to make decisions on your behalf, whether managing property or making healthcare decisions. A Power of Attorney is an extremely powerful document, because it grants your agent broad powers to do anything that you could do.
The Scope of Power
The authority you give your agent may be limited in scope, or very broad. For example, you have an investment account, in your name, and you want someone to trade in it on your behalf. Depending on the type of Power, the agent may access your bank accounts, pay bills, and make healthcare choices for you. Even more, the agent may be able to give gifts on your behalf, or transfer real property and assets to a Trust.
You can assign, revoke, and revise Powers of Attorney at any time. Although, the more protective aspects of these documents work best when part of a thorough Estate Plan.
The Purpose of Powers
If you were ever to become incapacitated, decisions you make on a daily basis to manage your assets will need to be handled. Assigning a property power agent allows bills to be paid and property maintained using your accounts, thereby avoiding court Guardianship Proceedings. In addition, when making medical decisions, your agent may seek guidance on your healthcare preferences in your Health Care Power of Attorney.
Death automatically voids Powers of Attorney, so this is no substitute for a Will. Creating the correct scope and providing clear guidance in these Powers are a crucial aspect of Estate Planning.
Types of Powers
Health Care Power of Attorney
A Health Care Power of Attorney appoints your agent to make medical decisions on your behalf. The law does not automatically grant family members or friends this Power. You have to explicitly designate your agent. Adults have the ability to accept or deny certain treatments, even against the recommendation of a doctor. Your agent will be able to make those choices for you. Therefore, your medical power should contain descriptive, clear, and thorough language about your medical preferences. It makes your agent's job easier and gives them peace of mind when making tough decisions.
Granted, your agent can go against your wishes. This is why you need to appoint someone you trust that aligns with your preferences. Additionally, your Health Care Power of Attorney will nominate a Guardian of your person, in the event that none of your named agents can act.
In the case of a terminal illness, your health care agent may express your wishes to medical staff. But if they are unable to make decisions, a Living Will speaks on your behalf.
Property Power of Attorney
A Property Power of Attorney gives your agent the authority to act for you in whatever circumstances you delegate. Designating what you want controlled prevents interaction with the courts, which saves time and money. Your agent can access certain accounts so that bills can be paid and property maintained. You can give them the ability to gift assets to beneficiaries, as part of your Estate Planning. If real estate needs to be sold or transferred to a Trust, you may give them the authority to do so.
Essentially, you give someone the ability to do as you would do. You must trust that your agent will manage your property accordingly. Creating the correct scope of power for your agent can limit potential misuse of authority, but does not prevent it. This agent has much more authority than a trustee of a Trust.