Nobody likes to think of his or her own human frailty, but the sad fact is that most of us are just one second away from a debilitating illness or injury. While losing the ability to direct your own life is bad enough, failure to appoint a trusted person to act on your behalf can be even worse.
The best way to see that your wishes are carried out, when you are incapable of directing your affairs, is to give power of attorney to someone you trust with your life. A power of attorney is a legal document that allows another person or an organization to act in your stead when you cannot. Powers of attorney can be very limited, or very broad, depending on your needs.
There are a few basic types of powers of attorney:
- The general power of attorney gives someone a wide variety of powers to act on your behalf.
- The special power of attorney allows someone to act as your agent only in limited circumstances. One example might be giving an attorney authority to sign documents at a real estate closing.
- A healthcare power of attorney authorizes someone to make medical decisions for you if you are incapacitated.
- A durable power of attorney combines the general, special and healthcare powers of attorney into one document and adds certain language to make the appointment “durable”. It generally is good from the time you become incapacitated up to the point of your recovery or death.
Don’t confuse a healthcare power of attorney with a ‘living will’. A ‘living will’ is a document that expresses your wishes on whether or not to remain on life-sustaining equipment. Since it is only for one express purpose, the ‘living will’ does not empower someone to make medical decisions, including employment of doctors, nurses, or hospitals and all other healthcare related issues. That is the purpose of the healthcare power of attorney.
What can someone with your power of attorney do? Well, that depends on what you put into the document. You can empower a person to transact all of your business affairs, provide for your physical needs and, in general, act as if they were you in just about every area of your life. For estate planning purposes, many powers of attorney allow your agent to make annual gifts to your heirs, thus removing the assets from your estate. You can also give power of attorney only for specific transactions or purposes.
Who should you choose as your agent? The short answer is you need to choose someone you would trust with your life because that could be exactly what you are doing. Especially in the case of a durable power of attorney, the person literally becomes you from a legal perspective. Many times, spouses will choose each other to represent them. If you are unmarried, you might look to a parent or sibling or adult child to serve as your representative. You can also look to a trusted friend or even a trust company.
Why do you want a power of attorney? Again, the person who acts as your agent has your life in their hands. In some states, the most competent person is appointed as your agent. Suppose you have a fairly nice estate and you are incapacitated. If you didn’t give your son, the carpenter, your power of attorney, an unscrupulous attorney could claim greater competency and perhaps gain control of your affairs, even if the attorney doesn’t know you. The only way to make sure your wishes are carried out is to give power of attorney to someone who will respect your wishes.
Let’s look at another example. Suppose you and your wife are in the process of divorce when you are suddenly incapacitated. Since your wife is your legal next of kin, guess who will be handling your affairs? Do you really trust that soon-to- be ex-wife with your life?
Finally, be aware that powers of attorney do expire. Even the durable power of attorney is of no effect upon your death. In the eyes of the law, you are the one appointing someone to act as you - when you die, there is nobody left to grant a power of attorney.
The laws regarding agency, and who can act for an incapacitated person, vary from state-to-state and can be complex. The only way to insure your wishes are respected when you become incompetent is to name an agent prior to your disability. So, is a power of attorney really necessary? You bet your life it is!
Enjoy Labor Day.