In this article, we will discuss another important topic closely associated with estate planning; power of attorney. You will get to know what exactly power of attorney is, why you need it, the role of it, and how you will get one.
To its simplest form, power of attorney is a document or tool that allows you to hire a person or organization to take care of your assets, financial, and health-related issues on your behalf while you are incapable of managing those due to some unavoidable reason. The reason might be your physical or mental health condition, age, living in a distant place, or other that is creating obstacles in handling the property on your own. A power of attorney (POA) is of different categories, and his right of decision making on your behalf changes accordingly.
A general power of attorney for estate planning
A general power of attorney is either a person or an organization having the power to take decisions on several issues as your replacement. The decision could be on property buying and selling, business-related transactions, settling claims, operating businesses, appointing a professional for assistance in a particular area, and more. The area covers a broad spectrum, but you should be aware that the decision should prioritize the owner’s interests.
This is an extremely powerful tool while you don’t possess sound health physically or mentally, stay in a distant place, say out of the state or country, and, therefore, incapable of handling property or money affairs. A power of attorney plays a vital role in estate planning, and you should choose someone smart enough to look after the complicated matters and make an effective decision if required.
Special power of attorney
This is a useful tool where you can specifically mention the areas for which you are appointing POA because of your incapability of looking into those affairs for some reason. The common areas for which people appoint a power of attorney are property, real estate, business transactions.
Health care power of attorney
Appointing a health care power of attorney means providing authority to that person or organization to make a health-related decision on your behalf for your well being. This is an important tool when you are aged, unconscious for a prolonged period, mentally unstable, immobile.
This is not the same as a living will though some state law allows you to combine POA and living will to achieve an advanced health care directive.
A durable power of attorney for estate planning
This is a special case. Suppose you have a power of attorney. Your mental stability gets disrupted due to some illness or accident. What will happen to your POA document? Will that still remain valid? In that case, a special POA comes into action. Here you can sign it with durability provision to continue the power of attorney effect.
You can also state that the POA effect will only continue if you become mentally incompetent while signing. In that case, you need the certification from two physicians about mental instability to validate POA.
How to choose Power of Attorney?
Trust is the key to select a power of attorney. Typically, a person chooses a spouse or child as a power of attorney. One is free to choose a relative, friend, organization as power of attorney. But he or she should be sure that the chosen person or agent will look out for the owner’s best interests. They should never misuse the power.
The POA will provide all the transaction records to you periodically. If you are incapable of reviewing those, instruct him to give the account information to a third party. On the other hand, the law is there to safeguard the POA too. He will be answerable only for intentional misconduct, not for committing something wrong unknowingly.
A power of attorney will be held if he or she sells out any real estate for no reason. But they have the authority to sell real estate to pay the pending dues. It is a part of estate planning.
To avoid such an incident, accepting agent responsibility is highly crucial. Agents mostly do it at free of cost. Still, you are free to consult a lawyer at any point in time if you suspect the agent is doing wrong.
Is it possible to appoint multiple powers of attorney at a time?
Yes, you can. Multiple agents can work together or separately. There is a fair chance the result will be of your best interests. Each of the agents can check and follow the other’s work, and thus any wrongdoing can be avoided.