What is a power of attorney? A power of attorney is a legal document in which you give someone else, your agent, the authority to make decisions for you.
What are common types of powers of attorney?
- General durable power of attorney/financial power of attorney – This document allows you to appoint someone to make decisions regarding your finances and/or personal care if you are incapacitated or unable to act or make decisions. This can happen permanently due to things like dementia, Alzheimer’s, accident or illness or temporarily due to an illness or accident from which you recover. If you become incapacitated, a general durable power of attorney may become one of the most important documents in your life. In the event of a temporary incapacity, it ensures that someone you trust can step in to pay your bills and keep your life running as smoothly as possible so it is easier for you to pick back up when you are well again. A well-drafted power of attorney does more than just protect your finances, it ensures that, in the event of incapacity, temporary or permanent, your values and desires are respected and your intentions and goals continue to be pursued.
- Specific power of attorney/limited power of attorney – This type of document allows you to appoint someone to make specific decisions, often for a specific period of time. One common example is an authorization to allow a school, daycare or camp to make medical decisions for your minor children, if you are unavailable or cannot be reached.
- Bank account power of attorney – a power of attorney completed at your bank that is only for use for a specific account or safe deposit box. Note: Many people have filled out a form at their bank and think they have a power of attorney for all their finances. That is most often not the case. Please check with your bank or an attorney to ensure that you have a complete general durable power of attorney, if you desire one.
What happens if I do not have a power of attorney? If you do not have a power of attorney and become incapacitated, a guardian may need to be appointed for you. The court may not appoint the person you would have chosen to take care of your financial and personal affairs. Guardianship can a be a lengthy, public and expensive process through the courts and should be avoided whenever possible. Additionally, guardianship appointments may be contested between family members and can bring about not only increased costs, but increased conflict within your family.
How do I choose an agent? There are many considerations when choosing an agent, or person empowered to act, under a power of attorney. Most importantly, you should choose someone that you trust and who will follow your wishes. For a financial or general durable power of attorney, it can be helpful to choose an agent who is reasonably good with money. However, if the person you trust the most is not great with money, they may still be the best choice as they can hire professional assistance to accomplish their duties. Complex family considerations will often come into play in deciding whom to appoint. Please discuss your specific situation and options with your attorney prior to making a decision.
Is there a risk of misuse? Yes. Unfortunately, there can be a risk of misuse or abuse with a general durable or financial power of attorney. It is a great deal of power to give to someone. This is why it is vitally important to choose someone you trust. You may also choose to limit the powers that you grant to your agent or how they may act. Ultimately, for most people, the benefits of having a power of attorney in place outweigh the risks. We can discuss these risks with you and discuss possibilities to protect you from possible abuse.
Every family is different and every person may have different considerations in drafting powers of attorney or in choosing a potential agent. We at Hallett Snyder Law pride ourselves in helping people think through difficult decisions with understanding and compassion, helping you come up with a comprehensive estate plan that expresses your wishes, and in drafting clear, concise, and enforceable estate planning documents. We would be honored to walk through this process with you.
