A power of attorney is a fundamental document to include in your estate plan. The reason is because it gives you the opportunity to have someone manage your affairs in the event you are unable to do so yourself, ensuring your financial and personal affairs are in good hands always.
For example, you may become incapacitated in the future due to Alzheimer’s or some other critical illness. Who handles your business in your stead? How are you sure there will be someone running things and making decisions just as you would have done? By creating a power of attorney, you remove the conflict of opinions which may occur within your family in such situations. They wouldn’t have to argue about what should be done. There would be an agent who makes the call.
Limited power of attorney or conventional power of attorney)
This type of POA is usually very specific, probably authorizing the agent to act on the principal’s behalf whenever the principal is out of the country or state, or authorizing them to make a particular sale of property.
This kind of POA takes effect when created and stops when the principal becomes mentally incapacitated or terminates the arrangement.
As the principal, you must state exactly what you are authorizing your attorney-in-fact to do.
Durable power of attorney
This type of power of attorney continues being in effect even when incapacity hits. Like the limited power of attorney, the durable POA takes effect when signed. The agent can carry out their authorization throughout the lifetime of the principal until the principal issues a cancellation of the arrangement. Durable POAs are the most popular because of their ease and cost-effectiveness.
Springing power of attorney
As the name implies, the springing power of attorney “springs” into effect immediately a particular event occurs, probably incapacitation. A springing POA must be designed with care to prevent difficulties in identifying what exactly is supposed to trigger the document into effect.
Medical POA
A medical POA is also known as healthcare proxy or durable power of attorney for healthcare. It is both a springing POA and a durable POA by the fact that it takes effect when a specific even occurs, such as incapacitation, and will last throughout the principal’s lifetime so long they remain incapacitated (which is likely if they have become old and developed a deteriorating mental illness like dementia). Some medical powers of attorney are designed to terminate the moment the principal recovers from the incapacity.
Bottom line
As you get older, you may be worried that someday you may become unable to handle your own personal affairs, let alone the financial ones. But what if you’re told you could make plans towards that now? Yes, you could lay down instructions now to ensure that your affairs are managed by someone of your choosing. A power of attorney helps you achieve that.
By creating a power of attorney document, you would have a say even when you can’t make decisions due to Alzheimer’s or dementia and any life threatening situations.
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Need help with drafting your power of attorney or determining which to create? Our estate planning attorneys Queens are ready to assist you. We ensure your documents are state compliant and works to your best interests.
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