What Should I Know About Powers of Attorney?
What would happen if you suddenly became unable to manage your finances or make your own health care decisions? Who would have the legal authority to act on your behalf?
These are important questions for every independent adult—not just older adults.
A Power of Attorney (POA) is a legal document that allows you to designate another person, called your agent, to act on your behalf. Depending on the type of POA, your agent may have authority to handle financial matters, make certain health care decisions, or carry out other responsibilities outlined in your documents.
At Beck, Lenox & Stolzer Estate Planning & Elder Law, LLC, our St. Charles estate planning attorneys in Missouri encourage adults to address Powers of Attorney as part of their overall estate plan. This includes young adults who are 18 or older, including college students.
The important point is not to wait until you need a Power of Attorney. If you wait until you are incapacitated, you may no longer have the legal capacity to create one.
Why Are Powers of Attorney Important?
Many people assume that a spouse, adult child, parent, or other family member will automatically be able to step in and manage their affairs if they become incapacitated.
That assumption can create serious problems.
Without appropriate planning, your loved ones may have to pursue court proceedings to obtain authority to manage certain aspects of your affairs. Depending on the circumstances, this can involve guardianship, conservatorship, or other legal proceedings.
Creating Powers of Attorney while you have the capacity to do so allows you to make important decisions in advance. You can identify the person you trust and establish the authority that person will have if you cannot act for yourself.
This is one reason incapacity planning should be completed before a crisis occurs—not during one.
What Are the Different Types of Powers of Attorney?
There are different types of Powers of Attorney, and the authority granted depends on the document.
Financial Power of Attorney
A financial Power of Attorney can authorize your agent to handle financial and property matters on your behalf. Depending on how the document is drafted, this may include responsibilities such as managing bank accounts, paying bills, handling investments, dealing with real estate, or managing other financial affairs.
A durable Power of Attorney is designed to remain effective despite your subsequent incapacity, subject to the terms of the document and applicable law.
The specific powers granted should be carefully considered because a POA gives another person legal authority to act on your behalf.
Health Care Power of Attorney
A health care Power of Attorney allows you to designate someone you trust to make health care decisions for you when you are unable to make or communicate those decisions yourself.
Your health care agent may need to communicate with physicians and other health care providers and make decisions consistent with your wishes and the authority provided in your documents.
Health care planning can be particularly important because your loved ones may otherwise be left trying to determine what you would have wanted during an already stressful medical situation.
Who Should You Name as Your Agent?
Choosing your agent is one of the most important decisions you will make when creating a Power of Attorney.
Your agent may be called upon to handle significant financial matters or make important decisions on your behalf. You should select someone you trust to act responsibly and according to your wishes.
Your agent should generally be:
Trustworthy and honest
Responsible
Capable of handling the responsibilities involved
Willing to serve
Able to communicate effectively with financial and health care professionals
Familiar with your wishes and priorities
You do not have to automatically choose your oldest child. Your agent should be selected based on who is best suited to carry out the responsibilities—not simply based on birth order or family expectations.
Location can also be a practical consideration. Someone who lives nearby may be able to handle certain responsibilities more easily, although a trusted person who lives farther away may still be an appropriate choice depending on your circumstances.
What Information Should You Give Your Agent?
Creating a Power of Attorney is only part of incapacity planning. Your agent should also know enough about your affairs to act effectively when necessary.
Consider organizing information about:
Bank and investment accounts
Real estate
Insurance policies
Regular bills and expenses
Business interests
Debts and financial obligations
Important professional contacts
Health care providers
Medications and relevant medical information
Your health care preferences and wishes
You should also make sure your agent knows that the POA exists and understands where the original document or an appropriate copy can be found.
Your estate planning attorney can also help you understand what information should be provided to your agent and how your documents should be maintained.
Should You Name a Successor Agent?
It is often wise to consider what happens if your first-choice agent cannot serve.
People move, become ill, die, become unavailable, or simply decide they are unable or unwilling to take on the responsibility.
Naming a successor agent can provide a backup plan. The successor can step into the role according to the terms of your Power of Attorney if the primary agent cannot serve.
When selecting a successor, consider the same qualities you looked for in your first-choice agent. The goal is to have someone you trust available to act if your original choice cannot.
Why Should You Create a Power of Attorney Before You Need It?
This may be the most important point about Powers of Attorney:
You cannot reliably plan for incapacity after incapacity has already occurred.
If you become unable to understand the nature and consequences of signing a legal document, you may no longer have the capacity necessary to execute a new Power of Attorney.
For example, imagine that someone suffers a serious accident or experiences significant cognitive decline without having completed their incapacity documents. Their family may know exactly what the person would have wanted, but knowing their wishes does not necessarily give family members the legal authority to act.
Creating your Powers of Attorney while you have capacity puts the decision in your hands.
You choose your agent. You establish the authority you want to give that person. You can communicate your wishes. And you can work with an attorney to make sure your documents are coordinated with the rest of your estate plan.
Why College Students Should Have Powers of Attorney
Turning 18 is an important legal milestone.
Parents may continue to provide financial and emotional support to their children, but an adult child’s parents do not necessarily have the same legal authority they had when their child was a minor.
A college student could become seriously injured or incapacitated in an accident or medical emergency. Having appropriate financial and health care documents in place can help parents or another trusted person address important matters if the student cannot do so.
For this reason, Powers of Attorney should not be viewed as documents that are only for retirees or older adults.
Every adult should consider incapacity planning.
Why Work With an Experienced Estate Planning Attorney?
A Power of Attorney is an important legal document that gives another person authority to act on your behalf. Because of the significance of that authority, your documents should be prepared with your particular circumstances and goals in mind.
An experienced estate planning or elder law attorney can help you:
Determine which Powers of Attorney are appropriate
Choose and designate agents
Consider successor agents
Understand the authority being granted
Coordinate your POAs with your other estate planning documents
Review and update your documents when circumstances change
At Beck, Lenox & Stolzer Estate Planning & Elder Law, LLC, our St. Charles estate planning attorneys work with Missouri families to develop estate plans that address both incapacity and what happens after death.
The time to create a Power of Attorney is before you need one. Don’t wait for an accident, illness, or cognitive decline to force your family to figure out what to do.
Frequently Asked Questions About Powers of Attorney
1. What is a Power of Attorney?
A Power of Attorney is a legal document that allows you to designate an agent to act on your behalf. Depending on the document, the agent may have authority over financial matters, health care decisions, or other responsibilities.
2. What is a durable Power of Attorney?
A durable Power of Attorney is generally designed to remain effective even if you later become incapacitated, subject to the terms of the document and applicable law. A durable financial POA can provide an agent with authority to manage specified financial and property matters if you become unable to manage them yourself.
3. Do I need a Power of Attorney if I am young and healthy?
Yes, Powers of Attorney are not only for older adults. An accident or unexpected illness can happen at any age. Adults who are 18 or older, including college students, should consider having appropriate financial and health care incapacity documents in place.
4. What happens if I become incapacitated without a Power of Attorney?
If you become incapacitated without appropriate documents in place, your family may need to pursue legal proceedings to obtain authority to manage certain aspects of your affairs. The specific process depends on the circumstances. Planning ahead can give you greater control over who will act on your behalf.
Don’t Wait Until You Need a Power of Attorney
A Power of Attorney is fundamentally about planning for the unexpected.
You cannot predict when an accident, illness, or cognitive decline might prevent you from handling your own affairs. But you can make decisions ahead of time about who you trust to help you.
Putting appropriate Powers of Attorney in place while you have capacity can help your family avoid unnecessary complications and ensure that your wishes are part of the plan.
If you live in St. Charles or elsewhere in Missouri, an experienced estate planning attorney can help you determine how Powers of Attorney should fit into your broader estate plan.
Contact Beck, Lenox & Stolzer Estate Planning & Elder Law, LLC for all of your estate planning needs by booking a call: https://beckelderlaw.com/book-a-call/
Reference: Bay Citizen (July 20, 2023) “5 Tips for Creating an Efficient Power of Attorney”