Did you know estate planning attorneys recommend anyone over age 18 have a power of attorney? Without one, even a long-married spouse may not be able to make financial or medical decisions if their spouse became incapacitated, according to a recent article “How to Set Up a Power of Attorney” from U.S. News & World Report. Naming someone and having the documents created to make them a Power of Attorney (POA) is part of creating an estate plan.
If someone becomes incapacitated, someone else—a family member or the state—has to be able to make decisions on their behalf. People hesitate sometimes, as they’re not sure about giving someone the power to make decisions. However, lacking a power of attorney may lead to big problems in emergent situations.
While the 18-year-olds are usually the most upset when they learn their parents wish to be named as their POA, it is because they don’t realize how mom and dad have no legal authority over them once they become legal adults.
State laws vary for powers of attorney, so it is important to work with a local estate planning attorney who can create a POA specific to your needs and following the laws of your state.
How to get started with a Power of Attorney
The first, and possibly hardest, part of a POA is determining who should be named. The individual needs to be responsible, trustworthy and calm in emergency situations. Just because someone is related to you doesn’t necessarily qualify them to serve in this role. You should also name a secondary POA, in case the first is unable or unwilling to act on your behalf.
Next, have your estate planning attorney draft the document, which typically works in connection with other estate planning documents including your will, health care proxy and HIPAA release forms. You should have a Power of Attorney for finances and a Health Care Power of Attorney for medical care.
Be careful about what happens to copies of the documents and where they are stored. Some estate planning attorneys create documents to be stored in a fire and water-proof box at home, in the safety deposit box at a bank, or in the attorney’s fireproof safe. Others say you should never put important documents in a safety deposit box in a bank, because if the documents are needed and the bank is closed, the person won’t be able to step up and act.
The POA needs to be kept up to date, just like any part of your estate plan. Some financial institutions will refuse to honor a POA if they consider it out of date. Every three to five years, this document should be updated. It should also be updated if the person named POA becomes incapacitated, dies, or moves to another state.
Should You Have a Durable Power of Attorney?
Powers of attorney typically end when a person becomes incapacitated, which is exactly when you want to have a POA. A Durable Power of Attorney can make decisions on your behalf, even if you become incapacitated.
What is a Springing Power of Attorney?
Power of attorney for finances or healthcare can be effective immediately when the documents are signed or take effect under predetermined circumstances, such as when the principal becomes incapacitated. This is known as a springing power of attorney because it “springs” into effect at a specific time. For many people, this is a very good idea. For others in certain circumstances, the springing POA creates a delay that can create other problems. An estate planning attorney can help you decide which is the best option for you.
Reference: U.S. News & World Report (July 21, 2022) “How to Set Up a Power of Attorney”