Why You Need A Power of Attorney | What Is It?

Why You Need a Power of Attorney and What Is It?

Oftentimes people put off preparing their documents thinking that they are only for the estate planning or they don’t know what they need. Questions asked may be why you need a power of attorney and what is it? Every adult needs a Power of Attorney in place no matter their age over eighteen.

A Power of Attorney is a written document that allows you to appoint someone else to act or make decisions on your behalf. You, often called the principal allow another person, called the agent to make health care decisions, financial transactions, or file legal documents should you become incapacitated or are unable to be present.

Being that these decisions are sensitive, the agent that you choose should be someone you trust and who knows your wishes!

People often think you only need this document when preparing your last will and testament and often put it on the backburner to prepare. What people don’t take into account is the need for one if you were in an accident and were incapacitated, even briefly.

Why Do You Need a Power of Attorney?

Without a Power of Attorney, you may be left with no one to represent your interests in financial matters, business, or health decisions. Or maybe there would be too many people with opinions, which may not be in alignment with your own, to come to an agreement with your health and affairs.

A Power of Attorney gives you and your loved ones clarity about what you want even if you are unable to communicate. A Durable Power of Attorney remains effective even if you suffer an incapacitating illness or accident.

Even if you prepare a Durable Power of Attorney, you can terminate it at any time, as long as you are mentally capable. You can revise over time as your needs and wishes change. What you cannot do, is prepare one after an accident or you are no longer mentally able to write one.

What Does a Power of Attorney Allow You To Do?

Having a Power of Attorney allows you to plan before there is a crisis. You don’t want to wait until you are unconscious from an accident or have progressive memory loss. It will be too late then, and you won’t be able to prepare one at that time.

You can choose someone you trust and who knows your wishes to look after your medical and/or financial matters. This trusted person will protect you from others making decisions on your behalf.

You can choose to have your medical and financial Power of Attorney together. Or maybe you trust one person with your financial affairs and another for your medical decisions, in which case you would draw up two Power of Attorneys.

There are times when you may need a Limited Power of Attorney to delegate someone to act on your behalf now and then expire in a set amount of time. This kind of Power of Attorney is often used during Real Estate transactions when the buyer cannot be present. A Limited Power of Attorney acts only in a temporary set of circumstances.

Who Needs a Power of Attorney?

Everyone over the age of 18 needs a Power of Attorney. It is not just for the elderly. Unforeseen accidents may happen. You want to put a medical and financial Power of Attorney in place before a crisis happens.

Your spouse does not have automatic decision-making power if you were to become incapacitated or pass away. If you have a property in your name only, your spouse will need a Power of Attorney to take legal or financial action for that property. He would not be able to sell it without the Power of Attorney.

Adult Children need a Power of Attorney. As parents, we are excited that our kids are graduating high school and going off to college. We don’t think of the accidents that could happen. They are eighteen and are therefore treated as an adult by law. But did you know that if they are injured, HIPPA laws prevent parents from being involved in medical decisions? You also would not be able to access any of their financial or school records.

What Are the Different Types of Power Of Attorney?

There are a few different types of Power of Attorney that you can choose from.

Durable

A Durable Power of Attorney is the one we most commonly recognize. This type of Power of Attorney begins when you sign, allowing your designated agent to take care of your affairs and continues should you become incapacitated.

Non Durable

One might appoint a Non Durable Power of Attorney if you need someone to legally handle your business financial affairs. You might grant your stock broker this type of document so they can manage your investments day-to-day. However, your agent’s power ends if you become incapacitated.

Springing

A Springing Power of Attorney specifies that a condition, such as becoming incapacitated, must be met for the document to “spring” into place. With this type of POA, your agent does not have authority over your affairs until the specified condition is met.

Most attorneys don’t recommend using springing POA’s because the process of determining whether you’re incapacitated may be difficult to prove. For instance, if you have advanced memory loss, it may take a long time for family and doctors to agree that you need someone to handle your affairs which would delay your agent from taking over, leaving your bills to go unpaid and a delay in medical decisions.

Financial

A Financial Power of Attorney gives your agent authority to act on your behalf in financial matters. You have the authority to choose which financial matters you want your agent to have. Financial POA’s can be durable or non-durable, depending on what you choose. Some items you may consider for a Financial Power of Attorney include:

File your taxes
Real estate transactions on your behalf
Manage your retirement benefits
Make bak deposits and withdrawals
Pay your bills and your family’s expenses

Medical

A medical power of attorney allows your agent to make healthcare decisions on your behalf. For example, if you are too ill to decide on a medical procedure, like a feeding tube, your medical agent can make that decision for you. Some items you may consider for a Medical Power of Attorney include:

Medication
Medical Care
Surgery
Which doctors and hospitals used
End of life care

What Kind Should You Choose?

The best POA for you depends on what you need it for. If you are creating a POA in preparation for a situation where you may become incapacitated, such as a car accident or health condition, you will most likely want a durable financial and a medical Power of Attorney.

If you want only one trusted individual to make choices in both finances and medical, then a general durable POA is the one you would want.

Perhaps you prefer for different people to be able to manage your finances and your medical concerns. Then you will want to create separate financial POA and medical POA documents.

What Happens if You Don’t Have One?

Having a Power of Attorney in effect protects your financial and real estate interests, your health, and even your manner of dying. If you don’t have one in place, your family will be forced into time-consuming delays that can also be costly.

Don’t wait until there is a crisis. A family cannot get a POA when they realize an elderly relative can no longer manage their affairs. Your medical and financial wishes may not be realized without a POA, leaving those decisions to others.

A court may appoint a conservator to manage your affairs if you don’t have a Power of Attorney in place. If this happens, neither you nor your family has any control over the appointee or that person’s decisions. Without that document in place, it makes the process more complicated and costly.

How To Get One!

The first step is to decide which type of Power of Attorney you wish to have from the above descriptions.

Secondly, you will want to choose an individual or persons that you trust to become your agent/s.

Then decide on what you want to have in your document.

If you would like to draw up your own power of attorney, you can find a template online that satisfies the state in which you live. You may need to have it notarized and may require a witness as well. You can find state-approved Power of Attorney forms from Legal Templates HERE.

OR, you can use an attorney to draw up your Power of Attorney to ensure it conforms with state guidelines and catch any loopholes in your document.

Last Thoughts About if a Power of Attorney is Necessary

It is important to note that a Last Will and Testament is NOT a Power of Attorney. A will is for the distribution of property after one’s death. A Power of Attorney is related to decisions made during your life. Your Last Will and Testament will go into effect, and your Power of Attorney ceases at your passing.

As you can see, it is crucial to have a power of attorney in place, and it is not just for the elderly or for estate planning purposes. You don’t want to wait until a crisis, as your wishes may not be acted upon.