The Importance of a Power of Attorney
Estate planning is a collection of legal documents that help protect your assets and personal property. Part of estate planning is planning for the unexpected. This is called “incapacity planning” and includes several factors, one of which is a document granting power of attorney to another person.
A power of attorney is a legal arrangement that gives power from one person (the principal) to another (the attorney-in-fact) to act on the principal’s behalf under certain conditions. There are several reasons a power of attorney may be created. However, the most frequent use of power of attorney arrangements is to make financial or medical decisions in the event that the principal becomes incapacitated.
Types of Power of Attorney Arrangements
There are four common types of powers of attorney. They can be written in such a way as to give a variety of degrees of responsibility to the attorney-in-fact. These include:
Limited power of attorney: These documents generally give the attorney-in-fact power over a single subject in one instance. For example, if you are traveling out of state or out of the country and need a deed of sale signed on your home, a limited power of attorney can give that authority to the attorney-in-fact. The legal power granted under the limited power of attorney expires automatically once the single event has been completed.
Durable power of attorney: This document stays in effect for the lifetime of the principal unless it is canceled. The document allows the attorney-in-fact to make decisions about the principal’s affairs that are outlined in the document. In other words, a durable power of attorney does not give global powers to the attorney-in-fact, but only those that are identified within the document.
Springing power of attorney: This document is triggered when a specific event occurs. Most often the event is the principal’s incapacitation. The document must be carefully written to avoid challenges so the triggering event can be identified precisely. Most commonly, a springing power of attorney allows the attorney-in-fact to make medical and financial decisions when the principal becomes incapacitated.
Medical power of attorney: These documents are also called health care proxies or durable powers of attorney for health care decisions. They are a combination of a durable power of attorney and a springing power of attorney. In other words, they take effect only when a specific condition has taken place and are revoked when that condition no longer exists. For example, a medical power of attorney can be triggered when the principal is either unconscious or is no longer of sound mind and body and may end when the principal recovers.
What Happens Without a Power of Attorney?
A power of attorney does not mean you’re giving up control over your finances or your medical decisions. In most cases, the purpose is to enable others to handle situations when you are unable to handle them yourself. It is important to create a power of attorney and have it in place before it becomes necessary.
Once the principal is incapacitated or is no longer of sound mind and body, they cannot sign a power of attorney. In that case, the court must appoint a guardian or conservator. Neither you nor your family will have any control over who is appointed. This becomes complicated and is often more costly than if a power of attorney were in place.
These are legal instruments that help protect your financial and physical health and may even guide decisions about your death. Whoever the court appoints will have broad authority over your financial and health care decisions. However, when you, as the principal, create a power of attorney, it allows you to separate the person who is making medical decisions from the person making financial ones. If you have further questions, reach out to us today.
Contact Arenson Law Group, PC Today to Create Your Power of Attorney
Whatever your current situation, it’s crucial that you don’t wait to create a power of attorney. Once you are incapacitated, it is too late, and the court will appoint a guardian or conservator to oversee your affairs. It will not matter that your family knows your wishes since the guardian will have the legal responsibility to make decisions.
The experienced and compassionate Cedar Rapids estate planning lawyers at Arenson Law Group, PC have decades of experience helping people in the community. We can make the process of creating a power of attorney that meets your needs smooth and simple. Contact our office online, or call us at (319) 363-8199 today to schedule your first appointment. It is important to protect your assets by planning for the unexpected.