Life is unpredictable, and without a power of attorney (POA), you could leave your family facing complicated legal decisions during a crisis. A Power of Attorney in estate planning ensures that your financial, medical, and legal decisions are handled by someone you trust. Failing to establish a POA can lead to legal challenges for your loved ones. They can be left making important decisions that directly impact your life without your guidance. There is also a greater risk of discord between relatives. You can create a POA that fully protects your needs by seeking legal advice.
What is a Power of Attorney?
A power of attorney is a legal document that gives another person the legal authority to decide on your behalf. The amount and scope of the authority will depend on the document’s language and the type of POA created. A general POA gives someone broad authority to handle everything from financial to legal matters. This type is most effective when you are physically incapacitated or unavailable. However, it automatically becomes void when you are mentally incapacitated or pass away. A durable POA is similar but remains in effect after you become mentally incapacitated. A limited or special POA is more restrictive, creating decision-making power for a specific task, reason, or time period. Finally, a medical POA limits decision-making authority in healthcare decisions.
Why a Power of Attorney in Estate Planning is Essential
While these documents can be created independently, they are typically created as part of a larger estate plan. That way, you can ensure your legal, financial, and healthcare wishes are followed should you become incapacitated. You can have peace of mind in the twilight of your years. Your family can have peace, as they have your legal plan in place for decision-making. In addition to a reduced risk of discord between family members, you prevent the need for court intervention or guardianship proceedings.
The Risks of Not Having a Power of Attorney
Several risks arise when you do not have any POA in place. The most significant issue is that there is no designated person you trust to make important decisions and manage affairs. This can leave you vulnerable to someone you may not trust or agree with taking control. Decisions and actions can then be taken that are against your best interest and wishes. Some disagreements can lead to court intervention without a designated person in place. This delays any action, potentially causing financial or other harm.
Common Mistakes in Choosing a Power of Attorney
One of the most common mistakes people make when preparing their POA is choosing the wrong person. The named person in your POA must be trustworthy and have the right qualifications. You need to trust them to make competent and responsible decisions. They need to be easily accessible and available to make the necessary decisions. They should be able to effectively communicate and be intimately familiar with your values and preferences. It is also helpful if they have some experience with financial and legal matters. There are also legal requirements for the person to be qualified:
- Legal Age: The agent must be of legal age (18 or older in most places)
- Mental Competency: The person must be mentally competent to fulfill the responsibilities of the POA.
- Not a Felon: Some jurisdictions restrict convicted felons from serving as a POA, especially in financial or healthcare capacities.
Another common mistake is preparing a POA once and never looking at it again. Life circumstances and relationships change, requiring you to revisit and update your POA. Perhaps your values or opinions have changed, meaning you want different decisions about your care later. Or, someone you were once close with is no longer a central part of your life. As a result, they are no longer the best person to be your POA agent.
A third common mistake is preparing the POA but not clearly and effectively communicating your wishes. While it is important to designate your agent, you need to make sure that person knows what you want. Outlining how you want situations handled in writing can reduce the risk of ambiguity later.
Prepare Your POA and Estate Plan
Establishing a Power of Attorney is a crucial part of protecting yourself and your loved ones in times of uncertainty. Having a POA in place ensures that your financial, medical, and legal decisions are managed by someone you trust, avoiding potential legal disputes and stress for your family. With the guidance of legal professionals, you can create a POA tailored to your needs and updated as life changes. Don’t wait until it’s too late—take control of your future by creating a POA today and providing peace of mind for you and those you care about most.
Take the first step in safeguarding your interests. Schedule an estate planning consultation now.
