The Basics of Naming a Power of Attorney
The term “power of attorney” (POA) refers to a legal document that allows another person to make decisions on your behalf. These decisions can be related to finances, healthcare, personal matters or real estate.
Naming a power of attorney is an important part of estate planning. It protects your assets and your family’s future in the face of life’s uncertainties. But when should you name a power of attorney, and what happens without one?
Important Power of Attorney Terms
Like all legal documents, a POA has special terminology. Here are some of the terms to know:
- Principal: This refers to you, the person who’s giving authorization to another person to act on your behalf.
- Agent: This is the person to whom you’ve assigned the power of attorney.
- Durable POA: The POA will be valid even if you become incapacitated or mentally incompetent. It goes into effect upon signing and lasts until you die. A POA is durable if it contains, “This power of attorney shall not be affected by incapacity or incompetence of the principal,” or something similar.
- Nondurable POA: This type of POA goes into effect upon signing, but terminates should you ever become incapacitated or mentally incompetent.
When Is the Best Time to Name a Power of Attorney?
Anyone 18 years of age or older can name a POA, and it’s best to execute and update it throughout your adult life. This will protect you, your assets and your family if you’re ever incapable of making decisions on your own.
Sometimes, special circumstances will motivate people to execute a power of attorney. Specific reasons include:
- Aging: Growing older can increase the likelihood of medical emergencies. Having a POA allows you to be prepared if you’re ever unable to take care of your own affairs.
- Medical procedures: When going through a risky medical procedure, you can allow someone to make important medical decisions on your behalf should you become incapacitated.
- Living overseas or traveling: Expatriates and abroad travelers will often execute a POA if they need someone to sign important documents and carry out business decisions in their absence.
What Happens When You Don’t Have a Power of Attorney?
Without a POA, loved ones will often have to go to court to get the authority to make decisions on your behalf. This can be a stressful, time-consuming process and isn’t guaranteed. If there’s a medical emergency, a stranger could be making decisions for you.
By having a POA, you’re not just assigning someone you trust to make these decisions. You also have the opportunity to communicate with that person about your decision-making preferences. It’s the best way to make sure your affairs are handled according to your wishes.
Get Peace of Mind With a Power of Attorney
Having a power of attorney is an important part of estate planning. With the right type of POA, you’ll protect your future and save your loved ones from major heartache.
To get your POA questions answered and develop an estate plan, connect with our White & Associates team. Schedule a consultation today by calling us at 763-241-0477 or send us a message.