Power of attorney (or POA)
Prevention is better than cure
Extensive travel, a busy schedule, a debilitating accident or illness, even a vacation can obstruct 24-7 availability. It may be prudent to appoint someone as your agent, a “stand-in” in the event of short- or long-term unavailability. The agent could handle important legal and business matters in your absence, or, if you were incapacitated, manage your finances and perhaps even your medical care.
Glorified secretary? Not really. I am talking about someone who can pay bills from your account if you are hospitalized, make business decisions, and who can speak and think on your behalf if you are unable.
Power of attorney (or POA) or legal guardian
With a Power of Attorney (or POA), you appoint a legal representative in the event of unavailability or incapacity, so that the state does not choose a representative for you. A POA is often overlooked, yet it is one of the most important estate planning appointments you can make.
In terms of content, you determine which transactions should be dealt with. You can grant either a general or a special power of attorney.
General power of attorney
A general power of attorney grants a representative broad, non-specific authority to act on your behalf. General powers of attorney are typically prepared by individuals who know they are sliding into dementia or suffer from a wasting, terminal illness. The chosen agent is often a daughter or son.
Special or limited power of attorney
There are also special or limited powers of attorney. These authorize a representative to conduct specific business or actions. A medical power of attorney is discussed in the previous section, but there are many other limited powers of attorney. Example: You sell your house, but the buyer does not appear in person for closing. He sends a legal representative instead. That representative’s signatory authority was created by a special power of attorney. His authority is narrow, perhaps confined to that single duty on a specified date at a designated location.
Durable power of attorney (DPOA)
Legal proxies can be issued at any time, become effective immediately, and are valid for as long as you retain legal mental capacity. A Durable Power of Attorney (DPOA) permits a general or special power of attorney to continue after or beginning at the point you lose legal mental capacity. Medical powers of attorney are durable powers of attorney.
Advanced directive
Accident, illness, drug addiction and age are the main reasons people lose mental capacity. It behooves you, while you are healthy and of sound mind, to draft an advance directive specifying important DPOAs. The directive will ensure that only individuals you trust will manage your care and finances. It will prevent unscrupulous third parties or family members from twisting your incapacity to their advantage.
Would you like assistance preparing powers of attorney and advance directives? I will gladly support you.