Living in the moment is important, as is preparing for the future and its uncertainties. When the time comes when you are no longer able to handle your legal, medical, and financial matters, it’s best to have a plan in place to secure your affairs.
Aging or unforeseen accidents can cause physical or mental incapacity. This ultimately makes an individual dependent on others for things as simple as performing daily chores to making legal or financial decisions.
Many believe that their next of kin, close relative, or friend can simply take over their matters on their behalf. However, to allow someone else to act for you, you need to execute a power of attorney.
What Is a Power of Attorney (POA)?
A power of attorney is a legally binding document that lets you appoint and authorize an agent. This individual will then have the power to manage your legal, financial, or medical matters for you in the event you become unable to make decisions yourself.
Thinking of the circumstances when a POA will be necessary can be uncomfortable, but making one is a strategic aspect of every estate plan. It’s also a common starting point for younger adults who wish to begin sorting out their affairs for their future.
Types of Power of Attorney
There are several types of POA, with each serving a different purpose:
Durable Power of Attorney
A durable power of attorney is a legal document that lets an agent act and continue to act on your behalf throughout your lifetime, even after you become incapacitated due to a sudden accident or illness.
Non-Durable Power of Attorney
Unlike a durable POA, a non-durable power of attorney ceases to be effective in the following circumstances:
- When you become incapacitated
- When you pass away
- When the document expires
- When you revoke the attorney’s powers
Besides these two primary classifications, here are other types of POAs you can leverage in your estate plan:
General POA
A general power of attorney is the broadest and most practical choice if you want your agent to be able to perform a wide range of financial actions on your behalf. It can be durable or non-durable.
Limited POA
As the name suggests, agents authorized by a limited POA can only perform actions you previously approved. This is an excellent estate planning tool if you wish to preserve control over your affairs and simply want some support.
Healthcare POA
Also known as a medical POA, this legal document authorizes your agent to make health-related decisions on your behalf. Healthcare POAs are durable, so your appointed attorney-in-fact will be responsible for enacting your healthcare wishes, even if you become incapacitated.
Each type gives your designated agent various levels of privileges, and consulting with an estate planning attorney can help you set up the one that best suits your needs.
The Importance of a Power of Attorney: What Happens if You Don’t Have One?
Having a power of attorney in place supports your wealth preservation planning in many ways, like the following:
- It helps you protect control of your assets, even in your incapacitation. A comprehensive POA grants your agent the power to protect your investments, real estate, and other assets. This privilege can be especially helpful when you no longer have the physical or mental capacity to manage them yourself.
- It helps you secure your family’s financial future. Setting up a power of attorney lets you ensure that your family’s financial needs, such as college tuition fees and household expenses, are met.
- It makes traveling less stressful for you. POAs are not only helpful for preparing for uncertainties in the future. You can also use them to authorize an attorney-in-fact to oversee your financial affairs while you are away.
Appointing an agent through a POA gives you assurance that a trusted person will carry out your wishes should anything happen to you. More importantly, it gives you peace of mind knowing your assets and legacy are protected.
On the contrary, without a POA, your loved ones may have to go through lengthy and strenuous legal processes to be able to make decisions on your behalf. The court may also step in and appoint an agent for you. The process is similar to when you pass away without a valid will – it’s a situation that can be stressful, time-consuming, and costly for everyone involved.
When Is the Best Time To Set Up a Power of Attorney?
Many people delay making a POA until they’re older or when it’s too late. If you plan to leverage this tool to fortify your estate plan, note that it should be set up and executed while you are still physically and mentally capable. Any issues with your physical and mental capacity can make you ineligible to create this legal document.
Ready To Set Up Your Power of Attorney Today?
POAs can provide you with not only control over your affairs but also peace of mind, even after unpredictable life events. But what is a power of attorney if it’s already too late to create one?
Don’t miss out on the benefits and advantages of having a power of attorney by setting it up well in advance. This can be a complex legal process, but the Wiles Law team is here to help you take advantage of this tool to ensure your wishes are honored and enacted. Get in touch today to take the next step in protecting and preserving your legacy.