Most people have probably never considered designating a power of attorney to act on their behalf in an emergency. Naming a Power of Attorney (POA) might make some people feel a little uneasy because of the responsibilities entailed. However, choosing a POA can help you ensure that there’s someone who takes your place if you cannot attend to your responsibilities.
If you are frightened about granting someone permission to act on your behalf, your concerns are very understandable. Nonetheless, having a Power of Attorney may provide significant protection for you, your family, and your estate. In this article, you’ll learn what Power of Attorney is, its many advantages, and factors to consider while obtaining a POA.
What is power of attorney?
A Power of Attorney is a legal document that authorizes someone to make decisions on your behalf if you cannot do so. Your inability to make decisions could be due to mental incapacity, physical incapacity, or even if you are out of the country and incapable of communicating.
A POA can be very specific or broad, depending on your needs. You can give someone the authority to make financial decisions on your behalf or grant them the authority to make all decisions for you.
You can also specify an expiration date for the Power of Attorney so that it only lasts for a certain period or until a specific event occurs.
What Does a power of attorney do, and what are the limits?
A POA gives the person you designate (known as your “agent” or “attorney-in-fact”) the legal authority to make decisions on your behalf.
In Florida, a POA is only for financial decisions, while Healthcare POA specifically authorizes your agent to make medical decisions on your behalf.
Your agent is legally supposed to act in your best interests and must comply with any limitations you outlined in the POA document. For example, you can specify that your agent can only decide your finances if you become incapacitated.
You also cancel a Power of Attorney anytime, as long as you are of sound mind. You can revoke your POA by simply notifying your agent in writing that the POA is no longer in effect.
Types of power of attorney
Several types of POA serve different purposes:
- Durable Power of Attorney: This form of POA enables someone else to handle legal and financial matters, such as signing contracts, conducting business transactions, accessing your bank accounts, and purchasing or selling real estate when you are unable to do so.
- General power of attorney: A general POA gives your agent broad powers to handle all legal affairs on your behalf. In some cases, a general POA may even allow your agent to make financial and medical decisions, such as paying your bills and hiring in-home care.
- Springing Power of Attorney: This POA usually takes effect if you become incapacitated. You will need to specify what triggers the POA, such as a physician’s certification of your incapacity.
- Limited Power of Attorney: this POA gives your agent limited authority to make decisions on your behalf. For instance, you could give your agent the authority to sign documents on your behalf while you are out of the country.
- Healthcare Power of Attorney: this POA gives your agent the authority to make healthcare decisions on your behalf if you cannot. it is also known as medical power of attorney
- Property Power of Attorney: This type of POA gives your agent the authority to buy, sell, or manage your property.
- Financial Power of Attorney: This POA gives your agent the authority to handle your financial affairs, such as paying bills, filing taxes, and managing your investments.
How does Power of Attorney (POA) Work?
When a situation or event you specified in your POA document occurs, your agent will have the legal authority to decide on your behalf. For example, if you become incapacitated, your agent can step in and start paying your bills, managing your investments, or even selling your property.
It’s vital to note that a Power of Attorney is a legal document, so it’s critical to ensure that it is prepared correctly. You should consult an experienced estate attorney when setting up a POA to ensure it is legally binding.
What are the risks of naming a Power of Attorney?
There are a few risks to consider when designating a Power of Attorney. First, your agent will have great control over your finances and property. This means that you need to choose someone who you trust implicitly.
Second, there is always the possibility that your agent will abuse their power. This could happen if they make decisions that are not in your best interests or if they use your property or finances for their benefit.
Also, choosing your child as your POA comes with its own set of risks. If your child is young or inexperienced, they may not be ready to handle such a responsibility.
Finally, it’s important to remember that you can revoke a Power of Attorney at any time. If you have concerns about your agent’s actions or change your mind, you can notify them in writing that the POA is no longer in effect.
Factors to consider when choosing a POA
There are some factors to remember when choosing a Power of Attorney.
- Trust: First and foremost, you must choose someone you trust implicitly. This person will be making important decisions on your behalf, so it’s crucial that you choose someone who you know will act in your best interests.
- Reliability: You need to choose someone reliable and capable of handling such a responsibility. This is especially crucial if you have a complex financial situation.
- Location: It’s often best to choose someone who lives close by in case any issues need to be handled in person.
- Qualifications: You may want to choose someone qualified to handle the specific tasks outlined in your POA. For instance, if you are giving someone the authority to sell your property, you may want to choose a real estate agent.
- Age: Avoid selecting someone much older than yourself, as they may not be around to handle the POA if you become incapacitated.
- Family dynamics: If you have multiple children, you may want to consider choosing a neutral third party to avoid any conflict.
- Willingness to serve: Not everyone is comfortable with the idea of having this much responsibility, so make sure to choose someone willing and able to handle it.
Benefits of setting up powers of attorney
There are a few benefits to setting up Powers of Attorney, even if you are healthy and do not foresee any chance of becoming incapacitated.
- Choose someone who will make decisions on your behalf: a POA allows you to choose someone you trust and who has a proven track record of making good decisions. This could be helpful if you have young children or are worried about what would happen to your finances if something happened to you.
- Save time and money: setting up a POA can save time and money in the long run. If something happens to you and you don’t have a living will and have not designated a POA, your family will need to go through the court system to have someone appointed to make decisions on your behalf. This can be a lengthy and costly process.
- Reduce stress for your loved ones: if you become incapacitated, having a POA in place can reduce stress for your loved ones. They will know that they are carrying out your wishes, and they will not have to make the tough decision of what to do on their own.
- Remove the necessity of guardianship and conservatorship: if you become incapacitated without a POA, your family may need to go through the court system to have someone appointed as your guardian or conservator.
- Enforce an immediate asset protection plan: if you have assets you want to protect, such as a business, setting up a POA can help ensure that they are protected in the event of your incapacitation. Without a POA, your family would need to go through the court procedure to have someone appointed to manage your assets, which could take time and be expensive.
- Provide peace of mind for everyone: having a POA in place can provide peace of mind for you, your family, and your loved ones. Once you know that your affairs are in order, your relatives will be assured that your intentions are clear and being carried out.
- Empower your agent to seek data from other agencies: A power of attorney can help to empower your agent to seek data from other agencies, such as the Social Security Administration or the Department of Veterans Affairs. This feature can be helpful if you need to make decisions about your benefits or your health care.
How to Setup a Power of Attorney
There are some things to remember when setting up a Power of Attorney. First, you will need to choose an agent that you trust implicitly. This person will be making important decisions on your behalf, so it’s crucial that you choose someone who you know will act in your best interests.
It would be best if you also talked with your agent about your wishes and expectations. That conversation will help them make the best decisions on your behalf and ensure they are comfortable with their role.
Finally, you will need to prepare the Power of Attorney document. It is best to organize the document with the help of an estate attorney to ensure that it is legally binding.
Once you set up your POA, you can rest assured knowing that there is someone who can take care of things for you if you are unable to do so. Doing this can provide great peace of mind, especially for those with families.
Frequently asked questions regarding POA.
You are not legally required to have a Power of Attorney, but it can be a helpful tool in many different situations.
You can choose anyone you trust to be your agent. This person will need to be over 18 and of sound mind. It’s recommended that you choose someone who lives close to you, in case they need to make decisions on your behalf.
You can revoke your Power of Attorney anytime, as long as you are of sound mind.
You will need to prepare the Power of Attorney document with the help of an attorney. This document will need to be signed by you and your witnesses and should be notarized.
If you become incapacitated without a POA, your family may need to go through the court system to have someone appointed as your guardian or conservator. This can be a lengthy and expensive process.
A lawyer-in-fact is appointed to act on your behalf legally, such as handling your finances or making medical decisions, while a POA is a document that grants someone the power to act on your behalf.
A POA gives someone the authority to make decisions on your behalf if you cannot do so. A living will outlines your desires for end-of-life care or medical procedures if you cannot communicate your wishes.
A general POA gives your agent broad authority to act on your behalf in many different situations. A special POA is much more limited in scope and only grants your agent authority to act in specific situations.
A durable POA remains in effect even if you become incapacitated, while a non-durable POA stops being valid if you become incapacitated.
Yes, in Florida you and two witnesses must sign your Power of Attorney.
Your agent is responsible for making decisions on your behalf, following your wishes. They will also need to keep records of any actions they take on your behalf and may be required to provide reports to you or the court.
Yes, you can have more than one person as your POA. However, it’s essential to consider whether or not multiple agents can work together effectively.