Powers of Attorney

A power of attorney is a legal document that allows someone you trust to make decisions on your behalf. This can include managing finances, paying bills, or making healthcare choices if you become unable to do so yourself. Having a POA ensures your affairs are handled according to your wishes and provides peace of mind for you and your loved ones.

One of the most important estate planning documents that a person can have is a durable power of attorney. Few people understand that if they are unable to make financial decisions for themselves, no one can make those decisions for them.

Most people believe that if they are unable to make financial decisions that their spouse can make those decisions for them or that their children would be able to make decisions for them. Some people add a child’s name to their bank accounts with the idea that this will resolve the need for a power of attorney.

The truth of the matter is, if you are unable to make decisions for yourself, neither your spouse nor your children will be able to make decisions for you.

A financial power of attorney document could be the most important estate planning document that you have drafted for yourself. Without a power of attorney, no one—not your spouse, not your children—can make financial decisions for you.

With a Power of Attorney, you can be assured that if you ever need someone else to make financial decisions for you, someone will be there. In addition, the person you name to make decisions for you will not be commingling their personal affairs with yours and that person will have an obligation (called a fiduciary obligation) to handle your affairs with the highest duty of care.

So you can better understand what a durable power of attorney document is, I will define some of the words commonly used when discussing a durable power of attorney.

The “principal” is the person who signs the durable power of attorney. The principal names an “agent” to make decisions for him. Typically, the principal will name a primary agent and one or two alternate agents, who will serve if the primary agent is unable to serve. The principal could name co-agents, two or more individuals who will serve as agent at the same time.

A “durable” power of attorney is a power of attorney that remains in full force and effect even if the principal can no longer make decisions for himself. Most powers of attorney are durable. If a power of attorney were not durable, then the agent would be unable to serve just when the principal needed him the most.

Some powers of attorney are “springing” powers of attorney. A springing power of attorney is not effective when the principal signs the document but springs into effectiveness when the principal can no longer handle his affairs. Most powers of attorney are effective immediately.

In my opinion, every person over the age of eighteen should have a power of attorney. Whether it’s a springing power or immediately effective and whether you have one agent, alternate agents, or co-agents is up to you, but most everyone should have a power of attorney.