Senior Living News

What Is a Power of Attorney?

A power of attorney (POA) gives someone else the authority to act on your behalf if you're unable to make decisions for yourself. It's a legal document that details the situations in which someone else can take over decision-making power for you. In a POA, you're the principal, and the person or people who can act on your behalf are the agents.

The power of attorney goes into effect if you become temporarily or permanently incapacitated due to an injury or illness. A POA may end if:

• You revoke it
• A court decides it's invalid
• An agent can't carry out their duties
• The agent is your spouse and you get divorced

Types of Power of Attorney

You can choose from different types of power of attorney based on your needs and preferences. Understanding what each type allows is essential when establishing your POA.

Medical

A medical power of attorney gives your agent control over health-related decisions if you become incapacitated. For example, if you experience a medical event that results in a coma, your agent takes over to decide which medical treatments you should receive. The agent's decision-making power typically starts when a medical professional decides you can no longer make your own health care decisions.

Financial

With a financial POA, the agent has power over certain financial decisions and actions to help you maintain your retirement budget. You can choose between different types of financial POAs to manage how much control the agent has.

General

When you choose a general financial power of attorney, your agent handles all types of financial actions, typically outlined by state laws. Examples of tasks the agent can perform include opening financial accounts, paying bills, depositing and withdrawing money, managing retirement benefits, managing real estate and filing taxes. Certain limitations are set by the state. For example, your agent can't make changes to your will.

Limited or Special

If you only want your agent to control certain tasks, you may want to consider a limited POA. With this type of power of attorney, you specify which financial actions the agent can take on your behalf.

Durable

A durable power of attorney stays in effect even if the principal becomes mentally incapacitated. With this type of POA, an agent can make decisions on your behalf if you become incapacitated due to an injury or illness. Nondurable POAs end if you can't make decisions for yourself. For example, you might grant a nondurable POA to an investment broker who can make certain financial decisions for you.

Springing

A springing power of attorney defines specific actions that trigger the POA to spring into effect. For example, it might specify the level of incapacitation required before the agent takes over.

What Happens If You Don't Have a Power of Attorney?

Without a power of attorney, it can be more difficult for your loved ones or close friends to make decisions for you. They may have to take legal action to have a guardian appointed by the courts. This process can take a lot of time and money. You also miss out on the opportunity to choose who's in charge of your decisions if you're already incapacitated at the time.

Benefits of Having a Power of Attorney

Looking at the benefits of having a power of attorney can help you decide if you should get one. Some of the perks include:

• Control over decision-making: By establishing a power of attorney, you have full control over the people who can make decisions on your behalf. It gives you time to think through the options while you're still in good health. You can be more intentional and choose someone who'll work in your best interests.
• Conversations about your wishes: Creating this type of legal document encourages you to talk to your loved ones about your wishes. Choosing someone who understands and respects those requests increases the chances of those wishes being carried out.
• Protection against financial abuse: If you choose a trusted individual for a financial power of attorney, you'll feel more confident they'll make financial decisions that benefit you.
• Faster transition of control: Having the courts assign a guardian is often a lengthy process. With an established power of attorney, your selected agent takes over much sooner. This means your wishes can be carried out more quickly if you become unable to make decisions on your own.

Elimination of legal action: When you create a power of attorney, you handle the legal aspects of the process up front. Your loved ones don't have to involve the courts later to gain guardianship.