How Important are Power of Attorney Documents?
Power of Attorney documents are a critical part of an estate plan. Understanding these important items will help you plan for your future. Everyone that looks for a downriver estate planning attorney should be aware of what Power of Attorney documents do, the different types, and why they are vital to a complete estate plan.
What IS a Power of Attorney Document?
If you needed to make important decisions about your personal finances, your business, or your healthcare, but were unable to do so, who would you want to make those decisions for you?
We all like to think of questions like this as hypothetical. The reality is that as we age, these can be very real situations. As one’s health fails, they may not be able to handle financial decisions on their own, or even get the right medical care. This is why a Power of Attorney (POA) directive is so important.
By definition, the POA is a written declaration by you, the principal, to formally appoint an individual to make decisions and act on your behalf should you be incapacitated. Most people select their spouse or an adult child for these important roles.
Power of Attorney documents provide you with peace of mind. You now know who will be making decisions on your behalf should you be temporarily or permanently incapacitated.
What Are The Types of Power of Attorney Documents?
There are many variations of Power of Attorney agreements, and we handle them all at The Mitten Law Firm.
When you prepare your POA, it is up to you, as the principal, to determine which powers your assigned agent (or agents) will have on your behalf. Typically, POA documents grant agents a variety of powers, by their authority also may be limited to specific responsibilities. For this reason, this is referred to as a “limited” or “special” POA.
You could also use a regular or “full” Power of Attorney. This grants one agent or representative broad decision making power over your financial matters and healthcare. This is the most common POA, and is included in almost all estate plans.
Another alternative is the durable Power of Attorney. The Durable POA is very popular because it remains in effect after your incapacitation and death. Limited and full Power of Attorney documents become null and void for a handful of reasons. If you revoke the POA, if there is an expiration date, if you become mentally incompetent or if you die.
Why Might You Use A Limited POA?
There are several reasons why you may elect to use a limited Power of Attorney. You may want to keep your business and personal finances separate. You might also want your spouse to handle your medical decisions, yet have one of your children managing your business.
You might also consider geography. You might have one child that lives nearby and another that lives in another state. It might make sense to have your local child making emergency medical decisions while day-to-day financial decisions might best be handled by your other child. Speak with your estate planning expert to help you make these decisions.
Why Might You Use a Full Power of Attorney?
As the most common POA document, a full Power of Attorney offers simplicity. A full Power of Attorney will simplify your estate plan by granting a single individual broad decision making power.
It is very useful if you do not own a business or have a complex personal financial portfolio. Likewise, if you do not have several heirs, then a full POA might make the most sense for you. Discuss these matters with your downriver estate planning attorney to determine the best course of action.
Why Might You Use a Durable Power of Attorney?
The durable POA is a popular choice because it takes effect after you become incapacitated and remains in effect if you pass away. This is the main difference between full POA and durable POA.
Imagine you are in a car wreck and are in a coma. If you have a full POA or a limited POA in place, that POA becomes void. With a durable POA, your chosen representative will retain the ability to act on your behalf.
Remember that you, as principal, can revoke your POA or alter it at any time. Keep in mind that you should regularly review your estate plan and keep your Power of Attorney documents updated to reflect your wishes.
Need to set up your estate plan or review it? Contact Downriver estate planning experts at The Mitten Law Firm today.
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