What is a Power of Attorney?
Introduction
When people think of estate planning, they often focus on drafting a Will or Trust to manage and distribute their assets after death. However, estate planning also includes appointing individuals to assist in matters before death, especially in times of incapacity. In this article, we’ll explore what a General Durable Power of Attorney and a Health Care Power of Attorney are, who should be selected for these important roles, and how they fit into the broader scope of estate planning.
What is a General Durable Power of Attorney?
A General Durable Power of Attorney (POA) is a legal document in which a person (the “principal”) appoints another individual (the “agent”) to act on their behalf with respect to certain matters. The agent is authorized to make decisions and manage the principal’s affairs as if they were the principal themselves. The authority granted can include handling financial matters, such as paying bills, managing real estate, conducting business transactions, and filing tax returns.
A General Durable Power of Attorney can either be effective immediately or can be effective upon the principal’s incapacity (called a “springing” power of attorney). Once effective, the Power of Attorney remains valid during the principal’s lifetime, unless revoked by the principal. However, a Power of Attorney expires upon the principal’s death, at which point an executor or trustee generally takes over to manage the estate or trust of the principal.
What is a Health Care Power of Attorney?
Similar to a General Durable Power of Attorney, a Health Care Power of Attorney allows the principal to appoint an agent to act on their behalf. However, the authority of this agent is specifically limited to making health care decisions. This can include consenting to or rejecting medical treatments, choosing healthcare providers, and making decisions about end-of-life care.
Like a General Durable Power of Attorney, a Health Care Power of Attorney can either be effective immediately or can be effective upon the principal’s incapacity and, once effective, the Power of Attorney remains valid during the principal’s lifetime, unless revoked by the principal. A Health Care Power of Attorney also expires upon the principal’s death.
What to Look for in an Agent
Choosing the right person to act as your agent is crucial. Ideally, the person you select should be in a stable financial position and, most importantly, someone you trust not to misuse their authority and to act only in your best interests. While proximity should not be the deciding factor in selecting an agent, particularly given how much business is now conducted electronically, proximity can be an important consideration, especially with respect to your Health Care Power of Attorney, as selecting an agent who lives nearby (ideally in the same city or state) can make it easier for them to make decisions quickly.
It’s also important to choose someone who has the maturity, availability, and willingness to handle your financial or medical decisions. Having an open conversation with your chosen agent ensures that they are in a place in their life where they can take on this responsibility.
Conclusion
Selecting an agent to serve as your General Durable Power of Attorney or Health Care Power of Attorney is a significant decision, but it is an essential part of your estate planning. These roles ensure that someone you trust can step in and make decisions on your behalf during times when you are unable to do so for whatever reason. At Morris Laing Law Firm, our experienced attorneys are here to guide you through this process and draft the necessary documents to protect your interests and assets.
Written by Madison J. Pfalzgraf