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The Power of Power of Attorney

“POAs are legal documents that allow you to name an “agent” (also sometimes referred to as an “Attorney-in-fact”) to act on your behalf for financial or health care decisions. They are key components of any estate plan.”


Adult children, in college and in their early adult years, need health care POAs, so their parents may interact with doctors and be involved in their health care decisions. A business associate needs a non-durable POA to sign a document for a business owner, if they are out of the country or away on business. A family member needs a POA to manage your own personal affairs, in case you are temporarily or permanently incapacitated by illness or injury. POAs are not just for seniors. Accidents and illnesses occur and having a POA in place simply makes good sense.

Who needs a POA, and what kind of POA? A POA is a legal document. Without it, no decision may be made on your behalf, until a court proceeding is held and a person appointed by the court. Be sure that when you name a POA, you chose a person who you trust implicitly to manage your affairs or make decisions for you.

There are two basic types: a financial POA and a health care POA.

A financial POA can take care of specific things or all financial matters on your behalf. That includes paying bills, writing checks, opening and closing accounts, filing tax returns, buying and selling property (including real estate as well as investments, like stocks and bonds) or reallocating a portfolio.

Here’s a lesser-known fact: typically, a POA does not have authority over beneficiary designations. This is done so the person cannot name someone, other than the person who was chosen by the account owner. There are exceptions, so check with your estate planning attorney about your state’s rules. The health care POA can make health care decisions on your behalf, if you are unable to do so. This may include life-sustaining treatments or whether to admit you to a hospital or other kind of care facility.

Another necessary document is a Living Will, otherwise known as a Medical Directive or Declaration to Physicians. This document is solely focused on indicating whether a feeding tube or other life-sustaining measures should be taken. The health care POA agent is required by law to follow the instructions in the Living Will, unless the two contradict each other. In that case, a court ruling may be required. It is possible that the court would rule in favor of the most recently created document.

Any POA can be durable or nondurable. Durable means the powers associated with the POA remain in effect, after the person becomes incapacitated. Nondurable means the powers cease when the person becomes incapacitated. For a specific goal, like signing a document if you are out of the country, a nondurable POA can work. Otherwise, you’ll want a durable POA. Speak with your estate planning attorney about the different types of POA, the situations in which they are applicable and how to select a POA agent. These are important decisions and should not be made lightly. Make sure to communicate to your named agents what your wishes are and make sure your POA documents define exactly what powers the agents will have.

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