Many people recognize they should have a Will. But, in many situations, the most important planning document may be a well-drafted power of attorney as described in The Miami News-Record’s recent article entitled “Power of attorney options match different circumstances.”
When a person can’t make his or her own decisions because of health, injury, or other circumstances, a power of attorney (POA) is essential. A POA is implemented to help their loved ones make important decisions on their behalf. It helps guide decision-making, enhances comfort and provides the best care for those who can’t ask for it themselves. A POA permits the named individual to manage their affairs. Unlike a Will, the client themselves are at risk if they don’t have a POA.
To know which type of POA is appropriate for a given circumstance, you should know about each one and how they can offer help. Now, keep in mind there more different kinds of powers of attorney than what I discuss here, but these apply to virtually everyone at some point.
Durable Financial Power of Attorney. This is the most common and is the default for most planning. These give a person decision making authority limited to the powers provided in it. The term “durable” means that it continues to be in effect when you are incapacitated.
Some of the key issues to determine are whether you give the agent the ability to make gifts, including to whom they can gift, the ability to change beneficiary designations, change your estate planning documents and other issues.
Springing Power of Attorney. One key issue of the POA is when it starts. For example, it can be effective immediately upon the execution of the documents, or it can start once the POA creator becomes incapacitated. This is a “springing” power of attorney because it “springs” into action upon the event of incapacitated. Some people may not feel comfortable granting someone else power of attorney, while they’re healthy. This POA takes effect only upon a specified event, condition, or date.
Medical Power of Attorney. Especially in a hospice setting, it permits another person to make medical decisions on the patient’s behalf, if they lose the ability to communicate. This includes decisions about treatment. In this situation, the agent takes the role of patient advocate and communicates with the physicians.
Limited Power of Attorney. This POA provides the agent with the authority to handle financial, investment and banking issues. It’s usually used for one-time transactions, when the principal is unable to complete them due to incapacitation, illness, or other commitments. The most obvious example is a limited POA for real estate transactions.
Powers of attorney are far more complex and important than people realize, and the law changes on them frequently. There are many other reasons to update your estate plan as well such as described here https://www.galliganmanning.com/twelve-reasons-to-update-your-estate-plan/ If you don’t have this document, ask a qualified elder law or estate planning attorney to help you create one.
Reference: The Miami (OK) News-Record (July 7, 2020) “Power of attorney options match different circumstances”