Although we should not need something as significant as a global pandemic to force us to think about the need for estate planning, it tends to be one task that many of us choose to delay. Whether it’s just too difficult to think about, or you think you have plenty of time to make estate planning decisions, it can be tough to take the first step.
If the COVID-19 pandemic has you thinking about the inevitable, you’re not alone. Getting informed is a great start, so you are already on the right path.
While there are many estate planning documents you need to consider, we will focus on Powers of Attorney in this article – because there is probably no better time to plan for the unexpected. Let’s start with by defining exactly what they are, and how they can help you prepare now for temporary or permanent incapacity in the future.
What Is a Power of Attorney?
A Power of Attorney is a legal document that grants permission to another individual to act and make decisions on your behalf, while you are living. It is important to note that many people use the term “Power of Attorney” to refer to both the legal document and the person appointed within that document. The document itself specifies whom you appoint to act and make decisions on your behalf, and it is often created as part of a more complete estate planning package. The person you appoint to act on your behalf is actually called an “Agent” or your “Attorney-in-fact.” You should carefully consider who you decide to appoint as an Agent because the responsibilities of an Agent are nothing to take lightly. Depending on which type of arrangement you execute, your Agent may be responsible for your medical affairs, business dealings, legal matters, and finances. They should be someone you know, respect, and trust.
At the same time, it may help to appoint more than one Agent (either as a back-up or to work together as co-agents). For instance, many people appoint their spouse as their Agent, but if you are both incapacitated simultaneously (in a car accident, perhaps) someone else will need to act in their stead. Likewise, many spouses are traumatized when their loved one is hurt and may find it difficult to make decisions or act as responsibly as they normally would. Piling additional responsibilities onto your spouse’s shoulders at a time when they are emotionally overwhelmed may not always be the best plan.
As estate planning attorneys with decades of experience, we work with our clients to consider the importance and gravity of selecting your Agent wisely and to avoid common pitfalls.
Four Types of Power of Attorney
Many people fear granting too much power to an Agent and want to ensure they are not relinquishing their own independence. Fortunately, there are four different types of Power of Attorney that allow you to decide what powers your Agent will have, and under what circumstances they will have the authority to act on your behalf:
1. General Power of Attorney
A General Power of Attorney goes into effect the second it is signed. It permits your Agent to perform any act that you would normally perform, including managing finances or making medical, legal, or business decisions. This form of Power of Attorney terminates if you become incapacitated or pass away. Like most other forms of Power of Attorney, it is also revocable if you later decide to switch Agents for any reason.
2. Limited Power of Attorney
A Limited (or special) Power of Attorney grants an Agent specific powers for a limited purpose. For instance, you may grant an Agent the power to sell your home but want to limit their powers to selling the home only.
3. Durable Power of Attorney
A Durable Power of Attorney is virtually the same as a General Power of Attorney except your Agent is permitted to retain their powers if you become incapacitated. This type of arrangement is a wise way to enable your children to manage your affairs if you are hospitalized or diagnosed with a limiting condition.
4. Springing Durable Power of Attorney
A Springing Power of Attorney may provide the best of both worlds if you’re looking to retain your independence yet prepare for the unexpected. This type of Power of Attorney only becomes effective when a specific event occurs, such as your incapacity. Essentially, you designate an Agent whom you trust to manage your affairs if something prevents you from handling things yourself. Your Agent will not have any powers unless and until something happens to you.
Can I Use a Power of Attorney Form I Found on the Internet?
Just as you can represent yourself in court, there is no requirement that you seek the assistance of a lawyer for a Power of Attorney. There are DIY Power of Attorney forms readily available on the internet, but: buyer beware. The reason DIY estate planning documents are not advised is because estate planning is not as simple and easy as people may think. Many states have very specific requirements for these types of documents, and a failure to meet those requirements could invalidate the document – leaving you hanging at the worst possible time.
Our philosophy: If something is important enough to put into a legal document, it’s important enough to do it right. The last thing most people want are Power of Attorney documents that don’t work when they need them.
The Attorneys at Brousseau Naftis & Massingill, P.C. Can Help
As with most estate planning, it is best to prepare Powers of Attorney long before you need them. If you want to ensure your finances and well-being are protected, contact one of our experienced estate planning attorneys for more information.
