Question: Someone told me I should have a power of attorney. I don’t know what that is. Do I need one?
Answer: You should have a power of attorney. There are different types, but the basic concept of a power of attorney is you (the “principal) giving decision making authority to someone else you pick (your “agent). A power of attorney kicks in when you become ill, incapacitated or otherwise unable to make decisions for yourself. Power of attorney can give an agent very broad powers to do anything you could have done yourself and can also be tailored to give the agent only limited powers. When creating a power of attorney, you should determine what types of authority you want your agent to have.
There are two main types of power of attorney. First, there is a Healthcare Power of Attorney. As it sounds, a Healthcare Power of Attorney gives the health care agent you name the authority to make your health care decisions is you are unable to make those decisions yourself. When we draft a Healthcare Power of Attorney we also include language permitting your medical providers to disclose federally protected health care information (called “HIPPA” information) to your agent. This is critical so your agent can make informed decisions about your care!
The other main type of power of attorney is called a Durable Power of Attorney. This is typically a very broad and general type of power of attorney. Sometimes this is also referred to as a Financial Power of Attorney. A Durable Power of Attorney permits your agent to make your financial decisions for you if you are unable to do so yourself. This includes accessing your bank account to pay the mortgage, paying your employees, managing your business, paying your medical bills and much more. Again, this can be drafted to include or exclude certain powers. Many people get nervous at the thought of someone else having authority to manage their finances. But remember, your power of attorney only becomes effective if and when you become unable to make decisions for yourself and handle your own affairs.
Powers of attorney are critical components to any comprehensive estate plan. Although we can prepare them as individual documents, we encourage people to adopt powers of attorney as part of a comprehensive estate plan. Since we believe that trying to the right thing for yourself and your family shouldn’t put you under significant financial stress, we offer a number of wallet friendly estate plans designed to fit every budget. Learn more about our flat fee estate plans for every family.