What is a Power of Attorney? Do I need one?
By Dawn Padanyi, Esq.
A Power of Attorney (POA) is a document that appoints an individual or organization to handle your business and life affairs if and when you are unable to do so on your own behalf.
However, the common misconception is that a POA is just for the sick or elderly. EVERYONE needs a POA. Whether you are single, married, with family or without, there are times that a POA is needed because you personally are not available and/or able to act on your own behalf.
Some common examples of times when a POA comes into play: A businesswoman is travelling out of town and unable to handle the local needs of her business; You own property in another state that is listed for sale, it requires substantial work, but you are busy working at home; Mr. P was just diagnosed with a long term degenerative disease; or Mrs. W is scheduled for major surgery in a month.
Getting a POA in place is not hard or time consuming!
There are several different types of POA that address different needs and situations. Which one is right for you?
- A General Power of Attorney grants sweeping powers to the individual or organization appointed as your “agent” or “attorney in fact”. The powers typically including the ability to handle and interact on your behalf with financial institutions, banks, insurance companies, realtors, vendors, lawyers, etc. I recommend that the POA include a durability provision which merely means that the POA remains in effect even after the individual becomes incapacitated or incompetent. A General POA is a very helpful document that I advise ALL of my client have. It is part of an estate planning package I recommend.
- Health Care Power of Attorney gives your appointed agent the legal ability to make medical decisions on your behalf if you are unable to make decisions for yourself (ex of scenarios: unconscious, mentally incompetent, pre or post surgery). This document is also part of the estate planning package I recommend to all my clients. I incorporate a health care power of attorney with a living will also known as an advanced health care directive to provide additional direction concerning an individuals health care desires when he/she has been designated as at an end-stage by a medical professional. A living will, among other things, addresses whether or not an individual wishes to be kept alive using life support.
- Limited or Special Power of Attorney provides the individual designated as the agent the power to conduct or handle very specific and/or limited acts. For example, you could have a limited POA giving your agent the ability to sign a real estate listing agreement or sales agreement for you or you can give your agent the ability to sign one particular contract on your behalf if you will be out of town or incapacity for a period. This is often down with business partners or between elderly parents and their adult children when they are selling property out of state.
Who Should I Designate as My Agent?
Who one chooses to designate as his/her agent is a personal decision that an attorney is not able to advise on ethically. However, the agent should be someone for whom you have ultimate trust and confidence. It can be a family member, friend, colleague, or a professional that will have your best interest in mind and will not abuse the power granted to him/her.
It’s is wise to have a back-up if you have one agent. It is also important to spell out how decisions are to be made if you have multiple agents. Can they act alone or must they act together? A lawyer can advise on the pros and cons of multiple agents and the decision-making ability, but the final decision is up to the client.
Power of Attorney Must Be Properly Executed to be Effective
A POA must be properly and legally executed to be effective. It is worthwhile to hire an attorney to draft, review and explain the POA to ensure your comprehension and to ensure that the POA accomplishes the goals set out. Furthermore, if it is not properly executed then the agent may not be able to exercise the powers granted in a time of need thereby defeating the purpose of executing the POA to begin with.
Change Your Mind About Your Appointed Agent?
POAs can be revoked by you at anytime as long as you are mentally competent to do so.
Contact the Law Office of Dawn Padanyi, LLC to get started on drafting your POA today!