An important part of planning for your future and avoiding costly conflicts is to name a power (or powers) of attorney. Proactively naming powers of attorney will help ensure that your wishes are carried out in the event you are unable to make financial or health care decisions for yourself for any period of time. I can assist in establishing a durable power of attorney and a health care power of attorney.
Why Do You Need a Power of Attorney?
Proactively naming a power of attorney can help you and your family avoid costly or unnecessary conflicts. A power of attorney, simply stated, is a document granting an agent the ability to make certain decisions on your behalf. The power of attorney gives one person the authority – the power – to do what you could or would do if you were present and able to perform the task. Instead, your agent, also known as your attorney-in-fact, is given legal authority to perform designated tasks. You designate your agent, and should be sure to give these powers only to a trusted individual. When a power of attorney is in effect, the agent essentially steps into the shoes of the principal and makes decisions that are legally binding on the principal.
Your agent should be a trusted individual who is capable of making informed, well-reasoned decisions. The agent granted authority under a power of attorney is known as a fiduciary and has a fiduciary duty to act in the best interest of the principal. An agent may be a family member, but this is not always the case. Consider carefully whether your family members may be too emotionally attached or too concerned with other family interests to make they types of decisions you are asking of them.
Because there are many different types of powers of attorney available to address a variety of situations, powers of attorney are extremely useful estate planning tools.
Durable Powers of Attorney
The authority granted under a power of attorney generally ends when you die or become incapacitated. However, a durable power of attorney goes into effect or, if already in effect remains in place, in the event you become unable to make decisions on your own. Because the durable nature of this type of power of attorney, you can craft the document in anticipation of the possibility that you may at some point in the future be unable to manage your medical or financial decisions.
Powers of attorney fall into two categories:
Financial Power of Attorney: A financial power of attorney grants your agent the ability to conduct and make a variety of decisions about your business and financial affairs. You may determine specifically what powers you would like your agent to possess. The authority granted may be broad or narrow and may be in effect for a specific or unlimited time frame during the life of principal. A specific power of attorney applies to one task that the principal anticipates being unable to perform. For example, if you know you will not be able to attend a real estate closing, you may appoint a financial power of attorney to conduct the specific tasks you would perform were you able to attend.
Most powers of attorney grant a broad range of authority to the agent. These include things such as filing taxes or dealing with state and federal tax agencies, conducting the sale of real estate or property, buying and selling stock, transferring assets, maintaining accounts, making gifts on your behalf an a range of other financial transactions. However, there are a few powers that a person may not typically delegate to his or her agent. For example, a person may not legally authorize his or her agent to prepare a will, vote or seek a divorce on his or her behalf.
Health Care Power of Attorney: A healthcare power of attorney is also known as a medical directive or advance directive. The health care power of attorney grants a trusted individual the authority to make medical decisions for you should you be injured, sick or otherwise incapacitated and unable to speak with doctors yourself. The document that you and your estate planning attorney craft naming your health care power of attorney is know as a health care proxy or proxy directive.
After you have drafted a living will and appointed a power of attorney, be sure to discuss your wishes with the person who will be making decisions on your behalf. It is important that you and your fiduciary have a complete understanding of how you wish your affairs and medical decisions to be handled.
I can provide the experienced guidance you need to draft a power of attorney agreement that is tailored to your needs and wishes. Contact me at my office in Vienna, Virginia for a free consultation.