A Power of Attorney is a legal document that designates someone to make financial or medical decisions or care for your children in several different scenarios. Here’s why a power of attorney is important.
There are several types of power of attorney documents that have different purposes. Some are used for specific situations, while others are wise to have it in place in the event of an emergency. Many people assume a power of attorney is used only when someone becomes incapacitated or is unable to manage their interests. Most people don’t realize that it is a flexible tool that can be used for both day-to-day purposes as well as complex legal arrangements.
What is a Power of Attorney?
A Power of Attorney is a legal document that designates someone to make financial, medical, or childcare decisions on your behalf. A power of attorney is essential for managing the affairs of incapacitated loved ones. It’s also useful for granting authority to professionals to represent people for business, legal, and financial purposes that require specialized knowledge. The person granting the authority is called the principal, and the person appointed, who has been given the authority, is called the agent.
The Three Purposes of a Power of Attorney
A power of attorney grants authority for the following purposes on behalf of the principal:
Managing financial and legal affairs if someone does not have sufficient knowledge. A principal can appoint an agent to handle a particular transaction on their behalf. This could include paying bills, trading stocks, buying and selling bonds, managing real estate, signing contracts, or any other duty delegated to an agent.
Medical decisions in the event someone has become incapacitated. It does not grant any other authority other than the healthcare needs of the principal. This is also known as an advanced care directive.
Making decisions on behalf of someone who has lost the mental capacity to ensure personal affairs are handled when they can no longer manage them on their own. This includes legal and financial matters.
A Power of Attorney is the Foundation of Proper Estate Planning
With a well-drafted power of attorney in place, your agent will be able to immediately step in if you become incapacitated, and make any financial decisions on your behalf. Without a power of attorney in place, your family would most likely have to go through a court process to access and manage your finances.
It’s also important to make sure you have a durable power of attorney rather than an ordinary or non-durable power of attorney. A durable power of attorney stays in effect if you become unable to make decisions on your own, while a non-durable power of attorney automatically ends if you become incapacitated.
If you don’t currently have a power of attorney document, consult with an attorney to prepare one for you. If you have a power of attorney that is several years old, or if you’ve moved to another state, you’ll want to make sure that it includes everything you need to be effective. Contact us at Moschetti Law for legal help. Call 888-664-1848 today!