Power of Attorney
A Power of Attorney (or “POA“) is a document in which you appoint another person to act as your agent. You are referred to as the “principal” and the agent is often referred to as your “agent” or “attorney-in-fact” (this is different from your lawyer, who is sometimes called your “attorney”). A POA is oftentimes called a Financial Power of Attorney.
The POA states what types of things your agent is permitted to do on your behalf, and when they can do these things. For example, you can give your agent the power to sell your property, communicate with you bank, manage your assets or basically any other power you wish to give them so long as it is legal. Acts of the agent that you authorize are legally binding on you, just as if you had done them yourself.
Generally, a Power of Attorney becomes ineffective when you become incapacitated. A Durable Power of Attorney, however, is a POA that remains effective during your incapacity. We typically draft Durable Powers of Attorneys for our clients, since their goal is usually to make sure a trusted friend or family member is able to manage their assets if they become incapacitated or are near death and cannot make decisions for themselves.
Why do I need a Power of Attorney? Your agent can act on your behalf when you are unable to due to incapacity or unavailability. For example, if you have a stroke or other illness that prevents you from paying your bills, carrying out routine matters and contracting for nursing services, the POA allows your attorney-in-fact to do those things for you. If you are out of the country or otherwise unavailable, your agent can communicate with you bank, sell your property, manage you assets, etc.
There are also significant advantages to naming someone as an agent under a Power of Attorney, rather than adding them as a joint owner to your bank account or other assets.
Who can be an agent (attorney-in-fact)? You can name any trusted adult over the age of 18 to be your agent. Often, people name a spouse, adult child or close friend or relative. There are a few rules regarding who cannot be an agent.
Can my POA make healthcare decisions on my behalf? Generally, another power of attorney called a Durable Power of Attorney for Healthcare Decisions (also called a Healthcare POA) is drafted giving someone the ability to make healthcare decisions on your behalf when you are incapacitated. You can name the same person to be your agent in both POA documents (financial and healthcare) or you can choose different people. The agent under the Healthcare POA is guided by your Advance Healthcare Directive and/or Living Will regarding your feelings on withholding or withdrawing certain life-sustaining treatment.
It is important to have both a Power of Attorney for Financial Matters and a Power of Attorney for Healthcare Decisions in place, in the event you become incapacitated and can no longer manage your own affairs.
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