One of the most crucial parts of estate planning includes executing a power of attorney. This is the best way for loved ones to be able to handle your affairs if you become incapacitated. By putting a power of attorney in place, you can help ensure your business and personal matters are managed by having someone else act on your behalf based on your specific requests.
What Is A Power of Attorney?
A power of attorney is a legal document that allows an individual to make decisions and take actions on another person’s behalf. For the purposes of this document, the person taking action is called the “agent” and the person giving them that power is called “the principal”.
There are four primary types of power of attorney, including:
General power of attorney:
When using this document, it can allow an agent to handle important decisions regarding property and finances until the time that the principal becomes competent or able.
Medical power of attorney:
This particular document is designed to authorize an agent to make medical decisions regarding treatment for the principal should the principal become physically or mentally incapable of decision making.
Special or limited power of attorney:
This arrangement is typically used when an agent is given power of attorney only for a specific reason. It normally expires as listed in the document by a precise end date or occurrence of an event.
Statutory or durable power of attorney:
This document essentially allows the same procedures as the general version with the exception that it stays in place unless it is revoked, or the principal passes away.
When Is Power of Attorney Used?
A power of attorney can allow another individual to perform certain actions as the principal desires. It is not carte blanche for the agent to do what they want to do when they want to do it.
In other words, having a power of attorney in place simply enables an agent to do things the principal requests, or would likely request if they could. It does not normally prohibit the principal from doing things for themselves. In large part, many principals choose a power of attorney as a matter of convenience. For example, some spouses create powers of attorney to allow their spouse to sign documents on their behalf if they, themselves cannot physically be there to sign.
Some of the other situations in which a power of attorney might be used are:
- Selling real estate that you cannot to be present for upon closing
- Buying assets that you cannot be in person for at the close of the transaction
- Making temporary decisions for you if you be momentarily unable to do so due to a short-term incapacity such as a serious illness or accident
- Making important decisions for you if you become permanently incapacitated
The Eligibility Requirements for Making A Power of Attorney
The first step in making a power of attorney possible is ensuring the principals meet the proper eligibility requirements. This generally includes:
- Being a minimum of 18 years old
- Being of sound mind
- Having the document signed in the presence of a notary public
It is worth noting that those pursuing a special or limited power of attorney may have to meet additional eligibility requirements, particularly those dealing with real estate. For an individual meeting these requirements, the next step is to get in contact with legal counsel that specializes in this specific area.
What It Means to Revoke A Power of Attorney
A principal of sound mind has the right to end a power of attorney if they wish to do so. This is more commonly known as revoking a power of attorney. At this point it becomes primarily the responsibility of the principal to:
- Tell the agent
- Alert appropriate contacts of the agent
- Create a sworn, written statement regarding the revocation
Why a Lawyer Is Needed for Power of Attorney
Because of the nature of a power of attorney when a principal is giving someone else power to act on their behalf, it is critical that the document be as specific and thorough as possible. This can be best done under the advisement of an experienced attorney specializing in this service.
Before selecting an attorney to help you craft this document, make sure that the below steps are also part of their process:
- Educating clients about what it means to share the power of attorney
- Advising clients to weigh and consider all available options before making a decision
- Reminding clients the importance of choosing an honest and trustworthy agent
- Explaining the importance of naming an alternate agent in the event the first named agent is incapable of serving
- Drafting and finalizing a power of attorney document