There will be many times throughout your life where you will need to have someone else act on your behalf for a variety of matters. A Power of Attorney (POA) can do as much or as little as you want them to do, depending on the authority you grant. Times when you would absolutely would want a Power of Attorney (POA) for you or a loved one include but are not limited to:
- When leaving the country for things like study abroad in college and even vacation;
- Before going on a military tour of duty;
- Prior to being admitted to a hospital for things like having a baby;
- When having surgery or a risky medical procedure performed; and
- When you establish or revise your estate plan.
Let me ask: Have you ever wondered what would happen if you were injured and could not do things like write checks or get money from the bank? Do you think that bills will just pile-up and the companies will just patiently wait, being considerate of the fact you are unable to do those things yourself?
Well, that is the exact situation Helen found herself in when her husband fell off a step-stool while screwing in a light bulb. When she spoke with us, she said he had hit his head and had been in a coma for 9 days. She was trying to figure out how to cash his checks because the bank would not let her unless she had power of attorney. Many of the bills he had set up as bill pay on line and when she tried to get a paper copy of the bill (since she did not know his passwords to access the account), the company refused to speak with her since he was the primary account holder. Unfortunately, we had to tell her that without a power of attorney, the only way she could manage the household in his stead was to file a lawsuit for Guardianship over him.
If, you find yourself in a situation where a child or other individual is responsible for you during illness, you can then rest easier knowing they're all set to handle all the details for you. A POA allows someone else step into a decision-making role and, in conjunction with a healthcare power of attorney and advanced directive, will give you the care and end-of-life you desire.
But what is a POA and h
ow it is useful? A Power of Attorney is a formal agreement between you and the trusted person you name (called an "agent"), who is designated to act on your behalf and in your best interest. It must be executed while you are totally legally competent to make decisions. Once there's a question about competency, then your POA may not hold-up if someone challenges it.
There are several types of POAs you may consider using, which give either broad powers over your affairs or only very specific and limited authority:
- Durable (or continuing) Power of Attorney: This is the broadest type of POA, which grants the agent the right to manage all aspects of your finances and decisions not medically related. Once it goes into effect, it remains valid until you revoke it or until you pass away. In the event you become mentally incapacitated, this is the type of POA your caregiver will need to assist you with everything you do on a daily basis, like refill prescriptions, clarify medical bills, cash checks, change phone provider services, pay utilities, sign-up for Medicare, renew a lease, talk with your CPA to prepare your taxes, and that is just the beginning.
- Financial Power of Attorney: A financial POA only grants your agent access to the financial accounts and other investment resources specifically listed in the documents. This allows you to give someone access to a limited portion of your assets to help you manage investments or household finances. You can also give different people control of different assets using the same document.
- Health Care Power of Attorney: This document is specifically for healthcare situations where you can no longer make decisions for yourself. It does not take effect until that point and allows the agent you designate to make decisions that align with your living will or other goals you've expressed.
- Limited Power of Attorney: If there is a limited period of time, or a limited scope of transactions that need to take place, then a limited POA can help you accomplish your goals. You can allow someone to handle certain financial transactions for you, grant a spouse any necessary access while you're traveling, or allow a child to manage your home while you're moving into assisted care. This POA will expire when its limited task or timeframe is complete.
Once you execute a Power of Attorney, your agent typically has the ability to access your finances and resources. However, you still have control over your money. Your agent is not supposed to act without your permission, but it is still wise to choose someone you trust to serve as your agent. You may want to talk to them beforehand about what your expectations are and make it clear that you only want them to act under your direction.
Hopefully, you chose someone as your agent who lives up to your expectations. However, if you're concerned that your agent is not acting properly, you can revoke your POA and notify any bank or other financial institution that you have done so. If necessary, you can go to the court to demand that your agent file an accounting of their actions. This may cost you a filing fee and the costs to prepare the accounting, but then you'll get an opportunity to challenge the agent's actions. If they were improper, you can sue your agent or press criminal charges.
Having an attorney help you draft your Power of Attorney, along with other estate documents, is important to ensure the documents will be legally valid and will perform exactly as you expect them to. Once drafted, you do not have to give this document to your agent until you need them to act on your behalf, but having one prepared could save your family considerable time, expense, and emotional frustration. Estate planning is all about taking care of your family and helping guide them when you are no longer able to do so and a POA is just one necessary piece of a great plan that everyone should have in place.
