What You Need to Know About Appointing a Power of Attorney

While most people prefer to be independent and self-sufficient, it is important to keep in mind that it is impossible to know how long someone will be able to remain independent or self-sufficient. Circumstances beyond your control such as accidents or medical issues could render you unable to make decisions or be self-sufficient. However, choosing who you would want to make decisions on your behalf in such circumstances is in your control.  You can prepare for incapacitation by accident or illness by appointing a trusted agent as your power of attorney (POA). These legal documents grant authority to one or more trusted agents to transact business or make medical decisions on your behalf.

What are the Different Types of Powers of Attorney?

Power of attorney documents must be drafted according to your state laws. Estate planning attorneys can help ensure you choose the right POA and that your documents are valid. Here are a few types of POAs and how they are designed to work.

• A power of attorney and limited power of attorney may manage your affairs until you are legally considered incapacitated or incompetent. The word limited narrows a power of attorney’s authority to make decisions regarding a specific property, funds, or situation.
• A durable power of attorney remains in effect until you revoke the document or upon your death.
• A springing durable power of attorney will not go into effect until a doctor certifies you as incapacitated, allowing you to keep control over your affairs until you are unable.
• A medical power of attorney is always durable and permits someone you trust to make health care decisions for you. The document may include sections similar to a living will, guiding the agent and doctors’ medical decisions to the principal’s wishes. You may also create a living will and make sure your agent has a signed HIPAA release form to access your medical records.

As of 2023, thirty-one US states abide by The Uniform Power of Attorney Act, attempting to standardize these documents. Additionally, the same has been introduced to Massachusetts. However, residents of multiple states and snowbirds who routinely travel and transact business in other states may benefit from creating valid power of attorney documents in both states.

If your spouse is your power of attorney, this designation does not automatically end when you finalize a divorce unless you live in the following twelve states: Alabama, California, Colorado, Illinois, Indiana, Kansas, Minnesota, Missouri, Ohio, Pennsylvania, Texas, Washington, or Wisconsin. Your powers of attorney should be updated as soon as possible in the event of major life changes.

What to Consider When Appointing a Power of Attorney

When appointing a power of attorney, the agent you select is a personal decision. Consider whether your adult children are trustworthy and mature in handling finances and medical decisions on your behalf. Some adult children move away or lose touch and are not necessarily suitable candidates simply because they are your children. You may consider selecting a close friend or professional instead. If your selected agent becomes disabled themselves or pre-deceases you, a successor agent should be included in the document. Always make decisions regarding your power of attorney while you are in good mental and physical health.

What Role Does Your Financial Power of Attorney Play?

A financial power of attorney can have the authority to perform some or all of these tasks:

• Pay everyday expenses for you and your family with your assets
• Maintain, pay taxes on, sell, buy, and mortgage real estate and other property
• Collect government benefits, including Medicare, Social Security, Disability, and more
• Invest your money in mutual funds, stocks, and bonds
• Conduct transactions with banks and other financial institutions
• Buy and sell annuities and insurance policies on your behalf
• File and pay your taxes
• Operate your small business
• Claim inheritance or other property to which you are entitled
• Transfer property to a trust you created
• Hire someone to represent you in court
• Manage your retirement accounts

There may be other actions necessary to perform. However, the above list constitutes significant duties. Your agent must act in your best interest, keeping accurate records and avoiding conflicts of interest.

Choosing your agent well, appointing backup agents, and tailoring your documents to your needs and specifications can remove a lot of worry about your future care and wellbeing. Having valid power of attorney documents avoids guardianship issues, which are time-consuming, expensive, and limit your freedoms. An elder law attorney can address any questions or concerns you may have about establishing power of attorney documents for your particular needs.

To speak with one of our experienced elder law and estate planning attorneys, please contact our office today at 1 (800) 680-1717. We look forward to the opportunity to work with you.