When people think about an estate plan, they typically think about wills and trusts. However, there are numerous other elements of a comprehensive estate plan, including powers of attorney.
Giving someone power of attorney means that you are giving them the authority to act on your behalf. Depending on the type of power of attorney, this means that someone else can make medical, financial or even business-related decisions if you cannot do so yourself. If powers of attorney are part of your estate plan — and for most people, they should be — then you should know some basic facts about how to do this.
Making Sure It’s Valid
To ensure powers of attorney are effective, make sure they are valid. As this article from The Balance states, making a power of attorney requires you to sign the legal document in front of a notary and at least one other witness. This is the case whether the power of attorney is durable (meaning the document stays in effect even if the principal becomes incapacitates) or non-durable (meaning powers terminate if a person becomes incapacitated).
Know What You Are Signing Over
When you are giving someone power of attorney, you must know and specify the authorities you are granting. This means specifically listing the types of decisions that an agent can make.
You should also understand that a power of attorney takes effect immediately upon signing. Under previous laws, there was an option to have a “springing” power of attorney that went into effect when the principal (person who granted power of attorney to an agent) became incapacitated. That option is no longer available.
Getting It Right
Power of attorney is a powerful designation that both a principal and agent must consider carefully and consider discussing with an attorney. It is important for both parties to know what it means and to understand how agents should act, especially when someone appoints multiple agents.
Again, a power of attorney is just one element of an estate plan, but it is a very important one. Understanding more about it can help you make informed decisions that protect your wishes.