“Alarmingly, approximately 50 percent of American adults lack any form of POA, but that is not surprising when you realize that only 45 percent of adults over the age of 55 have a will.”
When created by an experienced estate planning attorney, a Power of Attorney (POA) is a legally binding estate planning document providing the person (principal or grantor) the ability to appoint someone else to act on their behalf in legal and financial matters. A POA can be created for any adult, according to the article “Choose wisely when selecting an agent for a power of attorney” from News Tribune.
POAs are generally state-specific, meaning they must adhere to the state's laws where the grantor is a resident and follow their state’s law. The laws differ from state to state, so a local estate planning attorney is necessary.
The POA is usually created as part of a comprehensive estate plan. It’s best to do this before a person becomes ill or when a disability occurs. Everyone should have a POA, so someone else can manage their affairs if needed.
The person assigned to represent the grantor is known as an “agent” or an “attorney-in-fact.” They serve as an agent under the terms of a POA.
There are several different types of POAs. Some become effective the moment they are executed, which means they are signed with the required witnesses present. Others spring into effect upon a specific event or an expressed date identified in the POA and are called “Springing POAs.”
Some POAs are used for short-term situations, such as if a person is undergoing surgery and won’t be able to take care of their own business for a period of time. Regardless of the length of time, the agent is a fiduciary, meaning they are required by law to put the grantor’s interests ahead of their own. They need to be responsible, trustworthy and a good communicator. They must be 18 or older.
An estate planning attorney will help you determine whether the person you are considering naming your agent is a good choice. Someone who is a convicted felon, suffers from chronic financial issues, or is unable to manage their own life successfully is not a good candidate. Making this choice wisely avoids many future difficulties. For many people, their agent is a parent, adult child, or close family friend.
A very important step in the process is to ask the person ahead of time if they are comfortable acting as an agent on your behalf.
You may appoint multiple people to serve as your agent. However, to avoid possible conflict; it would be wise to have the POA documents express specific responsibilities for each person. If the agents disagree, it will be difficult for them to get tasks completed.
There are several types of POAs, and their powers are enumerated in the document. A general, durable, or limited POA includes financial and healthcare POAs. A durable POA is in effect whether the person is alive and well or incapacitated. A Limited POA can be used to give someone a specific purpose. The healthcare POA is used to make medical decisions on behalf of the grantor.
A health emergency is not the time to discover you don’t have a healthcare POA. Without a POA, family members or loved ones must go to court to obtain authority to address financial matters and make medical decisions. Instead, have your estate planning attorney create the POA documents needed to meet your needs.
Reference: News Tribune (Jan. 8, 2024) “Choose wisely when selecting an agent for a power of attorney”
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