As you start working on developing your estate plan, one term you’re going to hear and see a lot is “power of attorney” (POA). Most people aren’t entirely sure what that is. They often think a POA is a person. It’s not.
A POA is a document. It gives someone who’s typically referred to as an agent or attorney-in-fact the authority to make specific decisions on behalf of someone else (who’s known as the principal).
The most common uses of a POA in estate plans are for making medical and financial decisions if the principal becomes incapacitated and unable to make those decisions themselves. By appointing an agent you trust to have this authority, you can rest assured that these things will be handled responsibly if you become seriously ill or injured.
Note that only mentally competent people can give others POA. That’s another reason not to wait. Even if you’re not ready to develop a full estate plan, it’s wise to consider putting a couple of POAs in place.
Providing guidance to the person you give POA
When you grant someone to have POA, they can’t do whatever they choose. They have a legal responsibility to act in your best interests. You can be as specific as you choose with their limitations and provide direction.
If you grant someone POA over your health care decisions, it’s best to have an advance directive that details your wishes regarding things like under what circumstances you wish to have life-sustaining measures continued or ended.
If you give someone durable POA over your finances, you can specify what they can and can’t do. Maybe you just want someone who can pay your bills or move money between accounts. You probably don’t want them to sell your home or trade stocks.
What is a springing durable POA?
There are numerous types of POAs. Often for health care and finances, people choose a springing durable POA. When a specified event happens (for example, if you become incapacitated and “incompetent” in the sense that you’re in no position to make decisions in your best interest), the POA “springs” into effect.
There’s a lot more to know and understand about POAs. With experienced legal guidance, you can determine what is right for you and choose the best people to grant this authority.