Life brings the most unexpected when you least expect it which can put you and your family in such a situation that you yourself won’t be able to make decisions that will significantly affect you and your family. Though you had verbally authorized someone to make life decisions on your behalf, however, it is never considered legal. You must put up these responsibilities and the concerned responsible person for them on paper so that there won’t be any issues later like disagreement, dispute, court intervention, etc.
Estate Planning-
The legal document defining these responsibilities and the authorized person to do that is called the power of attorney. It is especially required for the time when you yourself are not capable enough to make the decisions by yourself due to old age, severe sickness or an accident causing injuries which can lead to physical or mental incompetency.
The individual granting this authority is called the “principal” and the individual appointed under the document is called the “attorney-in-fact” or “agent.” However, you must talk with the designated person to tell the responsibility entitled upon him/her and discuss your desires so that they would know your desires regarding the healthcare and finance matter.
Types of Power or Attorney-
A POA becomes effective as soon as it is signed and remains effective until the principal is alive and has not revoked the POA. Also, a POA can only be laid down by a mentally competent person. The POA can be of following types:
1. General POA: The agent is provided with broad powers covering almost all the activities to make decisions on your behalf under the general POA which includes investments, making gifts, life insurance, settling debts, etc. It also helps you to carry your financial affairs smoothly even when you are traveling.
2. Limited POA: The designated agent is restricted to represent you at some specific tasks or dealings in a limited type of POA. The POA will be ended when the task is completed or you pass away.
3. Springing POA: If you specify your POA to be effective at a scheduled date or event, it is said to be springing POA as they come into force at the occurrence of the mentioned event or date. It might include your traveling or incapacity. However, it must be specified clearly and carefully to prevent any kind of issues regarding the event.
4. Durable POA: This is similar to the general POA except for the fact that it remains effective in case of your incapacity as well unless it is revoked by the principal. After your recovery from illness or your death, the POA relationship ends as well.
Hence, a durable power of attorney is always advised so that the unexpected incapacity provision can be covered as well and there is no disturbance in personal and professional aspects. The durable POA can be of two types viz:
1. Durable Power of Attorney for Healthcare: Also referred to as medical POA, it provides the designated agent with the authority to deal with your healthcare issues in case of your incapacity caused by some disease or injury. Apart from appointing the agent, you can also specify your healthcare preferences which will be ensured by the agent to be fulfilled by the doctors in case of your disability.
2. Durable Power of Attorney for Finances: This POA authorizes your appointed agent to act on your behalf and handle all your financial issues in the event of your disability. The agent designated in the durable POA for finance can be the same or different from the agent designated in the durable POA for healthcare. POA can be drafted to be very broad and include all types of situations, or be very limited and applicable only to certain specified cases such as managing overall investments, receive and dispense payments, filing tax returns, depositing checks, etc. However, it is suggested you think carefully and limit the powers accordingly.
By drafting these documents, your family and doctors will know that your wishes are being fulfilled, you will have peace of mind and you can avoid the court intervention in this matter, where a judge who does not know you would decide about your healthcare and financial matters
It is to be remembered that you can cancel a power of attorney whenever you want, however, to do that you must inform your agent in written and retrieve the POA copies.
Illness and injury come unexpectedly while old age and daily life commitments are a truth of life and hence, POA can help you protect your property, financial and healthcare matters if you face any of such events. The POA safeguards your loved ones, your assets and yourself too if something unfavourable occurs and thus, gives you peace of mind.
