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Understanding the basics of powers of attorney

On Behalf of | Jun 12, 2023 | Estate Planning |

There are many different types of documents that people can include in their estate plans. It is quite common for testators to focus primarily on what will happens if they die and less on what might happen unexpectedly during their lives.

The best estate plans usually include a combination of testamentary documents that have power when someone dies and also living documents that determine what happens if someone becomes incapacitated and cannot manage without support. Powers of attorney are living documents that are often the cornerstone of modern incapacity plans.

Powers of attorney grant situational legal authority

Someone who drafts powers of attorney will choose an individual to serve as their agent or attorney in fact. That individual can perform certain important tasks on behalf of the testator when they can’t act on their own. Financial and medical powers of attorney are common, and people may choose either to combine them and name one agent or to separate them and have more than one person sharing responsibilities on their behalf when they cannot manage their medical care or household.

Many powers of attorney specifically include language to make them durable, which means that their authority persists even when someone experiences permanent incapacitation, such as after a diagnosis of dementia. Durable powers of attorney can give people control over who manages their care rather than leaving them at the mercy of an involuntary guardianship. Powers of attorney lose their authority when someone either recovers from their medical issue or dies.

Documents can be as specific as someone desires

Some people choose to limit when powers of attorney take effect, such as requiring that they remain incapacitated for a certain amount of time before anyone can access their financial resources. It is also common for people to limit the authority that they grant to an agent by specifically outlining what resources they can access or what transactions they can perform. Someone might empower a trusted agent to run their business or pay their mortgage but not grant them the authority to take other steps, like liquidating their assets.

People of all ages and personal circumstances can benefit from the creation of powers of attorney that can address their need for someone to make medical decisions on their behalf or manage their household after a personal emergency. Understanding what one can achieve with powers of attorney may help people see the value in adding these documents to their estate plans.