What is Power of Attorney?
Power of attorney (POA), broadly defined, is a legal document that gives someone the authority to act on your behalf in legal, financial, and even healthcare matters. This person, called the agent or attorney-in-fact, is required to act in your best interests. Power of attorney documents can be incredibly useful, especially if you are incapacitated, succumb to serious illness or injury, or if you travel outside the country for extended periods of time.
However, power of attorney can take many different forms. Although you can find boilerplate POA forms online, we strongly suggest working with an estate planning lawyer to draft your own. After all, the person you want to execute the sale of your house while you are on vacation in Germany may not be who you want giving the yay or nay to life support should you fall into a coma in Munich. Similarly, you may not want the power of attorney to go into effect until you are incapacitated or unreachable, an arrangement known as a springing power of attorney.
Do I Need A Power of Attorney?
Can you say, with 100% accuracy, that you will never become incapacitated? Are you sure, without a doubt, that you will never experience senility, sustain a brain injury, or fall into a coma? Probably not. Having a power of attorney is like keeping a spare tire in your car; you may never need to use it, but if you do, it is always better to have it on-hand and ready. Arranging for power of attorney can spare loved ones the pain and confusion of trying to sort things out in the moment and on their own. Similarly, because a custom power of attorney document can be tailored to lay out your wishes ahead of time, you can still retain some control over the situation, while this may not be the case if a court is responsible for appointing an agent or guardian in your absence.
Who Should I Give Power of Attorney
Since power of attorney grants someone else control over your financial accounts, business affairs, and, in the case of healthcare POAs, medical treatment, your agent should be someone you can trust–quite literally–with your life. While power of attorney can be revoked at any time as long as you are present, conscious, and sane, it’s important to understand that choosing the wrong agent could result in financial mismanagement and abuse.
To prevent this, some people choose to appoint multiple agents, who are expected to work together while making and executing decisions. While this method can introduce a system of checks and balances, it can also backfire. Disagreements and busy schedules can stall decision-making or cause one or more of your agents to resign. Working with a professional estate planner can help you pre-empt any agent issues before the document goes into effect.
Sara McKinney
saractag@gmail.com
As Cowen Tax Advisory Group’s Digital Content Marketing Specialist, Sara provides in-house copywriting and manages the company’s electronic records system, email marketing, and blog.
