As you age and you become less independent, protecting your finances, health, and personal decisions is an important step in maturity. You may not have thought about what would happen if you were involved in an accident or had a personal medical emergency, but it is critical to plan for such eventualities.
Appointing an “attorney,” sometimes known as a “representative” or “agent,” is a beneficial step toward peace of mind. In these cases, the term “attorney” does not refer to a “lawyer”, but rather to a preselected somebody operating on your behalf. This is accomplished through the use of a power of attorney document, which in your province or territory may be referred to as a personal directive, health care directive, representation agreement, or living will. Making these decisions now ensures that your affairs will be handled if you are temporarily or permanently unable to manage them.
You might fear that once an attorney is appointed, you will lose control over all decisions and how your assets are used. This is not true. A power of attorney is only appointed if you are deemed to no longer be mentally capable of managing your affairs.
What Exactly Is a Power of Attorney?
A power of attorney, often known as a POA, is a legal instrument that allows someone you hire (the “attorney” or “agent”) to make choices (the “grantor” or “donor”) and depict you to others. The power may be general and all-encompassing in nature, or specific in nature, only encompassing certain acts, such as bill payments, sales of specified real estate, investments of specific assets, or authority to transfer securities from the attorney’s name to another person. You, the document’s “grantor,” “giver,” or “creator,” grant this ability in advance.
A POA has traditionally been seen as an instrument used to govern a person’s affairs only when that person becomes mentally incapacitated or is unable to successfully manage their interests. Many people believe that the POA is only used as a last resort. The truth is that a printable POA is a very flexible legal instrument that may be utilized in a variety of settings to aid people in both routine and complex legal matters.
While a POA is still an important tool for managing the affairs and estates of mentally impaired loved ones, it has evolved into a useful system that allows individuals to delegate authority to professionals with specialized skills who can represent them in constitutional, business, or financial arenas where the person may lack specific knowledge. This allows people to compete on a level playing field when dealing with larger institutions that have paid professional employees to operate on their behalf. Nonetheless, there are people who can override a power of attorney such as a family member or loved one.
When Do I Need a Power of Attorney?
Making a POA is a crucial process that every adult should perform sooner rather than later in life. If you are unable to make decisions regarding your property, finances, personal life, or medical treatment in the event of an emergency, an attorney will make them for you (as you have already specified in your documentation). Consider your POA to be a type of disability insurance (it looks after you while you’re still alive) and your will a type of life insurance (it takes care of your loved ones after you pass away). Every adult should have the POA documents covering their legal, financial, personal, and medical affairs. Failing to do so can result in family strife and pressure.
Health Care Power of Attorney
A health care POA empowers your agent to make medical treatment decisions on your behalf if you are unable to do so. This could be due to your mental incapacity to make an informed decision or your inability to convey a decision. The agent’s authority extends beyond end-of-life decisions (which are frequently covered in a living will) to medical decisions that do not necessarily involve life-or-death situations. For example, if you are temporarily unconscious as a result of a car accident, your agent must consider the benefits and risks of emergency surgery vs attempting medication first.
Depending on the regulations of each state, health care powers of attorney may also be referred to as an advance directive, a designation of patient advocate, or a health care surrogate. The authority of your agent exists only while you are incapacitated. If you restore the capacity to make and convey an educated decision, you regain the ability to make the decision as well.
Do you require a health care POA? If so, then a health care POA should be included in your estate plan. If you become incompetent and do not have a health care agent, a loved one may need to petition the court to appoint a guardian, which is a costly, time-consuming, and emotional process.
Financial Power of Attorney
A financial POA can be used for a single type or all transaction types. So, do you require a financial POA? As part of your estate plan, you should include a springing durable financial POA. This allows someone you trust to handle your financial affairs if you become disabled. Otherwise, a loved one may need to petition a court to appoint a guardian or conservator of your property, which is a big process.
There may be times when you require a limited financial POA. This frequently happens when you are involved in a financial transaction but are unable to sign paperwork in person. For example, you may grant your spouse, business associate, lawyer, or friend POA to attend a real estate closing and sign paperwork on your behalf. You could also appoint someone to sign documents to transfer the title of a vehicle.
Selecting an Agent
The question, “Do I need a POA?” is merely the beginning. When you decide that a POA is required, you must ask yourself, “Who do I trust to be my agent?”
Finances: For a financial POA, you must have faith in your agent’s financial expertise and ability to make sound financial judgments.
Medical assistance: You must discuss your medical care preferences with your agent before executing a health care POA. Do you want everyone to do everything they can to keep you alive? Do you prefer certain procedures and treatments over others? Are there any situations in which you would prefer that nothing be done? Such wishes can be expressed in the POA itself or a separate document known as a living will or advance directive.
You should have a POA for both finances and health care if you have someone you can trust. Special situations may also necessitate the use of a restricted POA.
Review Your Power of Attorney Regularly
As life changes, you should examine and update your POA documents, just as you would with your will. Changes to your paperwork may be necessitated by significant events such as the birth or adoption of a child, the relocation to a new house, or divorce. Make sure your attorney is aware of the types of judgments they may need to make so that they are prepared and confident to assume the responsibilities if called upon.
Choosing someone to retain your POA and indicating that it will be effective even if you lose capacity guarantees that you have a strategy in place for managing your financial and personal affairs if you are ever unable to do so.
This provides you with more say over how that process is handled if the need arises. Your POA should remain effective if you relocate to another state; nevertheless, the American Bar Association suggests that you use such a move to update your POA. Naturally, when you die, the POA expires.