Understanding Power of Attorney (POA)

What is a Power of Attorney (POA)?

• Definition
  • A Power of Attorney (POA) is a legal document that grants a designated person the authority to act on your behalf in specified matters. This person is known as the “agent” or “attorney-in-fact,” while the person granting the power is the “principal.”

Types of Power of Attorney

Power of Attorney for Finance

• Roles and Responsibilities
  • A POA for Finance allows the agent to manage the principal’s financial matters. This includes:
    • Paying bills
    • Selling property
    • Managing bank accounts
    • Making investments
    • Handling tax affairs
    • Obtaining a mortgage against the principal’s property
• When It Is Used
  • This type of POA is typically used when the principal is incapacitated or otherwise unable to manage their financial affairs. It can be set up to take effect immediately or only when the principal becomes incapacitated.

Power of Attorney for Healthcare

• Roles and Responsibilities
  • A POA for Healthcare gives the agent the authority to make medical decisions on behalf of the principal. This includes:
    • Deciding on medical treatments
    • Choosing healthcare providers
    • Determining where the principal will live if they cannot live independently
    • Accessing medical records and communicating with healthcare professionals
• When It Is Used
  • This POA is used when the principal is unable to make healthcare decisions due to illness or incapacity. It ensures that someone the principal trusts will make decisions aligned with their wishes and best interests.

Executing a Power of Attorney

• Creating the Document
  • To create a POA, the principal must execute two separate documents: one for financial matters and one for healthcare. These documents must clearly outline the powers granted to the agent and the circumstances under which they take effect.
• Choosing an Agent
  • Selecting the right person to serve as your agent is critical. The agent should be someone trustworthy, capable, and willing to act in your best interests. It’s essential to have open and honest discussions with potential agents about your wishes and expectations.

Importance of a Power of Attorney

• Peace of Mind
  • Having a POA in place provides peace of mind, knowing that your financial and healthcare decisions will be handled by someone you trust if you become unable to manage them yourself.
• Avoiding Court Intervention
  • Without a POA, your family might have to go through a lengthy and costly court process to appoint a guardian or conservator to manage your affairs. A POA can prevent this by ensuring your chosen agent has the authority to act on your behalf.

Conclusion