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How important is a power of attorney?

On Behalf of | Nov 18, 2022 | Estate Planning

A power of attorney (POA) document enables you to designate someone that will act on your behalf in your absence, like when you are mentally or physically incapacitated. Such an eventuality may arise after a sudden illness or accident that leaves you unable to make sound decisions.

The person you give power of attorney is known as an agent or an attorney-in-fact. Once you appoint them to the role, they can legally make financial or medical decisions for you, depending on the scope of their authority.

Types of power of attorney

As the person executing the power of attorney, you call the shots regarding what the agent can or cannot do. For instance, you can only have them preside over your financial decisions alone (financial POA) or solely those affecting your health (medical POA). A general POA allows your agent to act on your behalf in all aspects allowed by the law.

Similarly, you can dictate when their legal authority to act as your agent begins or ends. You may give your agent authority to handle your affairs immediately or in the event of your incapacitation, whichever suits you.

Who should you choose as your agent?

Your agent should be someone you trust and who has your best interests at heart. Remember, they will have unrestricted access to your finances and the ability to make crucial decisions that may affect you in the long run.

You can choose more than one individual to act as your agent. However, you should define their responsibilities and working relationships to avoid confusion or other issues regarding their roles. It is also worth noting that you can revoke an agent’s POA at any time and for whatever reasons as long as you are mentally able.

Learning more about how a POA works and complements your estate plan will ensure you have everything covered when the unexpected happens.