The Power Of Attorney agreement is one of the most important documents you’ll ever sign in your life. Not everybody realizes how important it is, however. A little over half of adults have a Power of Attorney agreement in place.
People increasingly see the importance of the Power Of Attorney as the years progress, though. 83% of adults over the age of 72 have a Power Of Attorney agreement. Why do people realize the importance of this legal document as they age?
If you’re wondering “What is a power of attorney?” we’ve put together all the answers you need to make an informed decision.
What Is A Power Of Attorney?
Let’s start answering the question “What is a Power Of Attorney?” by defining our terminology. This will help you begin to see whether or not you need someone to be able to act on your behalf.
Power Of Attorney: A Definition
The definition of Power Of Attorney (POA) is a binding legal document that allows another individual to act in your stead should you become incapacitated for some reason. On the POA, the agent acting on your behalf is known as the attorney-in-fact or agent and you are known as the principal. The POA authorizes your agent to make a limited number of decisions. They can also be allowed to make a wider array of actions on your behalf if it’s stated in the POA.
Your agent can make an array of decisions about your finances, property, or health depending upon the terms agreed upon in your POA.
There are multiple forms of POA you can choose from.
A conventional power of attorney is one of the most common and is also known as a limited POA. A durable POA will last for the entirety of your lifetime.
Springing POAs only come into effect under very specific circumstances. A medical power of attorney is also sometimes called a durable POA for healthcare, which is fairly self-explanatory.
How POA Works
There are a number of common circumstances that often cause individuals to set up a POA. One common situation is if someone’s joining the military. This allows their executor to make decisions on their behalf should they become incapacitated in any regard.
Being incapacitated isn’t the only reason you could need to have a Power Of Attorney document set up. Another common scenario is if you’re working overseas. This way your agent can act on your behalf in the United States while you’re abroad. This is especially common for principals who don’t have a spouse.
Being elderly or having a long-term illness is by far the most common reason to have a POA, though.
Should you become incapacitated due to illness or otherwise not be able to make decisions or act on your own behalf, your agent has the capacity to make financial decisions on your behalf.
Some examples of financial decisions your agent might need to make include selling assets to pay medical bills, for instance. Or they might need to make decisions regarding your Medicaid plan.
Setting up a POA also can empower your agent to make real estate decisions and have access to government benefits, as well.
How To Set Up A POA
Setting up a POA begins with selecting someone you can trust implicitly to serve as your agent. The next step is to then decide when they can and cannot do. You’ll also need to decide on what circumstances these decisions will be able to be made.
For instance, you might set up your POA to go into effect in the instance that you become incapacitated. The advantage of having that drawn up as a legal document is that it goes into effect instantaneously should something happen. If you’ve ever dealt with a medical or legal emergency you’ll know that often time is of the essence and every second counts.
The other main advantage is that it lets you set up exactly what you want others to be able to take care of. One of the answers to the question “What is a limited power of attorney?” might be someone being able to make decisions regarding real estate in other states in case you’re not able to be there yourself.
Also keep in mind that even if a POA’s not limited, it often only gives your agent full control if you’re still in control of all of your faculties.
Additionally, other existing circumstances can cause the need for a POA. Say you own a piece of property that is in your name only. Even if you’re married, you might need to have a POA agreement dictating your spouse as your agent for them to be able to sell that property.
The good news is it’s not that complicated to set up a POA. Most states have some form of template that you can find online that will satisfy the criteria. Do keep in mind that often that agreement will need to be notarized before it becomes legally binding.
The other advantage of this approach is it gives you the occasion to look into the specific requirements of your particular state. There are no federal requirements for POAs, so you’ll want to make sure you’re in accordance with your particular state.
Setting up a Power Of Attorney agreement ensures that your mind is easy and untroubled, as you know that you and your loved ones will be taken care of should anything happen. After all, dealing with uncertain circumstances is stressful enough all on its own!
Looking To Set Up Power Of Attorney?
At Smith Barid, we understand that dealing with matters regarding aging can be some of the most stressful decisions you’ll ever have to make. It also can be complicated, which is why we specialize in elder law.
Whether you’re looking for someone to answer your questions like “What is a power of attorney?” or for guidance about estate planning, we are here for you and your loved ones to make sure you’re taken care of and provided for. Contact us today with any questions or to schedule an appointment!