While much of your estate plan focuses on actions that take place after death, it’s equally
important to have a plan for making critical financial or medical decisions if you’re unable to make
them for yourself during your lifetime. This is why including a power of attorney in your estate
plan is a must.
Defining a power of attorney
A power of attorney is defined as a legal document authorizing another person to act on your
behalf. This person is referred to as the “attorney-in-fact” or “agent” — or sometimes by the same
name as the document, “power of attorney.” Generally, there are separate powers of attorney for
health care and property.
Be aware that a power of attorney is no longer valid if you become incapacitated. For many
people, this is actually when the authorization is needed the most. Therefore, to thwart dire
circumstances, you can adopt a “durable” power of attorney.
A durable power of attorney remains in effect if you become incapacitated and terminates only on
your death. Thus, it’s generally preferable to a regular power of attorney. The document must
include specific language required under state law to qualify as a durable power of attorney.
Naming your power of attorney
Despite the name, your power of attorney doesn’t necessarily have to involve an attorney, although
that’s an option. Typically, in the case of a power of attorney for property, the designated agent is
either a professional, such as an attorney, CPA or financial planner, or a family member or close
friend. In any event, the person should be someone you trust implicitly and who is adept at
financial matters. In the case of a health care power of attorney, a family member or close friend is
the most common choice.
Regardless of whom you choose, it’s important to name a successor agent in case your top choice
is unable to fulfill the duties or predeceases you.
Usually, the power of attorney will simply continue until death. However, you may revoke it —
whether it’s durable or not — at any time and for any reason. If you’ve had a change of heart,
notify the agent in writing about the revocation. In addition, notify other parties who may be
affected.
Time is of the essence
To ensure that your health care and financial wishes are carried out, prepare and sign health care
and financial powers of attorney as soon as possible. Don’t forget to let your family know how to
gain access to the documents in case of emergency. Note that health care providers and financial
institutions may be reluctant to honor a power of attorney that was executed years or decades
earlier. Sign new documents periodically. Contact us with questions.