When you are asking yourself, why you should have a power of attorney, an important place to start is “what is a power of attorney?” A power of attorney is a legal document that authorizes someone else to act on your behalf in matters that you specify. The person you designate to act on your behalf is called the “attorney-in-fact” or “agent.” The authority that you give your agent can be as broad or as narrow as you want it to be.
When can you use a power of attorney?
Another question to consider to understand why you should have a power of attorney is to understand when can you use a power of attorney? A power of attorney can be used in a variety of situations. Powers of attorneys are typically used to designate someone to make financial decisions for you or to make health care decisions for you.
Financial Decisions
An example of the times that you would need a financial power of attorney are:
- If you are unable to manage your finances
- If you are unable to make important decisions due to illness or disability
- If you cannot make decisions because you are absent, i.e., you are going to be out of the country
- If you need someone to carry out a specific transaction like buying or selling property, signing contracts, or accessing your bank accounts
You can grant a power of attorney to someone you trust to handle these matters for you.
A health care power of attorney (also known as a medical power of attorney or healthcare proxy) is a legal document that allows you to appoint someone to make medical decisions on your behalf if you are unable to do so yourself. This person is called your healthcare agent or healthcare surrogate.
Healthcare Decisions
A health care power of attorney becomes important if you are incapacitated, unconscious, or unable to communicate your healthcare wishes. Your healthcare agent can then make medical decisions on your behalf, such as consenting to medical treatments, surgeries, and procedures, choosing healthcare providers, and making end-of-life decisions.
It’s important to choose a healthcare agent who understands your healthcare wishes and is willing to act on your behalf. You can also use a health care power of attorney to specify your preferences for end-of-life care, such as whether you want to be resuscitated, receive life-sustaining treatments, or be kept comfortable with pain management.
How do you create a power of attorney?
Powers of attorneys found on the internet are often unreliable and not state specific. Each state has their own rules about whether witnesses are required, a notary is required, and what language is needed for various situations. Therefore, your power of attorney should be executed in accordance with applicable state laws to ensure that it is legally binding. Using an attorney who knows what they are doing will save you a lot of money in the long run.
Why should you have a power of attorney?
If you do not have a power of attorney in place and become unable to make financial decisions on your own or if you have not specified someone who is allowed to make health care decisions for you, a court will need to choose a guardian and conservator. When a judge chooses someone to act on your behalf, you lose control. The judge may choose a private fiduciary rather than your family to make your decisions for you. Fiduciaries work for a fee and will charge you for their services. Alternatively, you can pick your own person to make these important decisions for you. You can drastically reduce costs by preventing a court from needing to invoke a guardianship or conservatorship.
A health care power of attorney is an important part of an overall estate plan, and it is recommended that you discuss your wishes and preferences with your healthcare agent and other family members or loved ones. When creating a power of attorney for someone to manage your finances, it’s important to choose an agent who you trust to act in your best interests and to specify the scope and limitations of the power of attorney document clearly.
We love to help our clients put these important documents in place to avoid the need for a guardianship and conservatorship, to reduce costs, and to make sure that you have a say in how your money is spent and what health care you do (or do not) receive. Contact us if we can be of assistance.