Do I Need a POA (Power of Attorney)?

Many of our elderly clients come in asking for a Power of Attorney. A doctor, family member or friend may have mentioned that they need one, but aren’t able to explain why or what type. This post will provide some basic information on the different types of Power of Attorney and what they allow others to do.

A Power of Attorney authorizes someone else to act on your behalf in a legal or business matter. There are different types of Power of Attorney including General, Special, Health Care and Durable.

A General Power of Attorney authorizes your chosen individual (called an “agent”) to act on your behalf in a variety of situations. These can be very broad in nature and allow the agent to perform many duties including but not limited to handling banking, buying and selling property, taking out a loan, entering into contracts, filing tax returns, applying for and handling government benefits (Social Security, Disability, etc.), making gifts and more. After consulting an attorney, these powers can be narrowed or expanded to suit the client’s needs or concerns.

A Special Power or Limited of Attorney authorizes your agent to act on your behalf only in a specific circumstance. We frequently draft these documents to authorize an agent to sell a piece of real estate, care for and authorize medical care for a child (usually when the parent is out of the country), or handle government benefits on behalf of our client.

A Health Care Power of Attorney authorizes your agent to make health care decisions on your behalf if you are not able to do so. The agent’s decisions would not supersede your own decisions and only apply if you are unconscious, incompetent, or otherwise unable to make your own decisions. This is different from a Living Will, which simply allows you to express your wishes related to life-sustaining procedures.

 A Durable Power of Attorney: This is not a unique type of Power of Attorney but instead refers to a language in a General, Special, or Health Care Power of Attorney that allows them to remain in effect even if you become incompetent. With the exception of a Special Power of Attorney, we strongly recommend that you include the appropriate language in your Power of Attorney documents to ensure they remain effective during any period of incompetency. In fact, for many of our clients the fear of future incapacity is the sole reason to have these documents.

The ability to download and create a Power of Attorney online has lead to serious issues and litigation. Often, people don’t understand that the POA becomes valid as soon as you sign it unless it’s specifically drafted not to do so. This means that your agent can immediately start making decisions and exercising the powers you have granted them. This is often not the intent. Similarly, if a POA is being executed after a diagnosis of dementia, Alzheimer’s or related illnesses, it’s important to have an attorney prepare the documents so that he or she can attest to your competency to do so. Many attorneys offer consultations at reduced rates to discuss these documents and others that might be a part of your estate planning. It’s wise to share your specific situation and get advice about exactly what you need to have in place to protect yourself, your assets and your heirs.

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