Estate Planning Beyond the Will: The Importance of Powers of Attorney
When it comes to estate planning, far too many people believe that a will is all they need. Unfortunately, a will does not apply to many commonly occurring scenarios in life for which it is vital to prepare ahead of time. This applies in particular to situations where you become incompetent (such is the case with dementia) or physically unable to make important decisions for yourself (such is the case with incapacitation due to an accident or illness).
Think about what would happen if you were in a car accident and fell into a coma. Who would have the right to make decisions regarding your care? Who decides whether to put you on a respirator or pull the plug? Who can pay your bills, and who will have the authority to sell your assets if you need cash to pay for healthcare? You may be thinking your spouse would make these decisions for you, but what if you are not married? Additionally, your spouse may not have the authority to make certain financial decisions on your behalf, such as decisions regarding a loan that is solely in your name.
For these types of situations, it is vital that you have Powers of Attorney in place to designate who will lawfully be allowed to make decisions on your behalf when you are unable to do so for yourself. A Power of Attorney refers to any document granting authority to someone—known as an “agent” or an “attorney-in-fact” in Florida—to make decisions for you. The person who makes the Power of Attorney is known as the “principal”. A Durable Power of Attorney refers to such a document that will endure unless or until it is revoked, including even in situations where the principal is incapacitated.
Most Powers of Attorney are durable, and there are actually two main categories: financial and medical.
You may elect to grant financial and medical powers of attorney to the same person, but you may also choose to select separate agents since these two categories grant different powers and obligations. Either way, it is vital that you select an agent or agents who you can completely trust to carry out your wishes responsibly as they could be making some extremely important decisions on your behalf.
A durable power of attorney for healthcare, sometimes also known as a designation of health care surrogate, will grant authority to an agent to make medical decisions for you if you are too ill to do so or you become incapacitated. Your agent will work with medical professionals to ensure you receive the care you would have desired if you were capable of making the decisions yourself. It is also important to create a Living Will that spells out your wishes and provides a road map to help your agent make medical decisions for you.
The durable power of attorney for finances tends to be much broader than the medical power of attorney, granting the authority for your agent to make financial decisions and conduct transactions on your behalf, including if you are ever incapacitated. This could cover a wide variety of actions such as selling property to pay for medical expenses, paying bills, depositing checks, maintaining investments, and paying taxes. When the power of attorney takes effect, this agent is granted fiduciary responsibility, meaning he or she is legally required to act solely in your best interests under threat of civil and criminal penalties.
Any competent adult 18 years of age or older may serve as your agent if you so choose.
As the principal, you can also choose to limit the scope of authority or responsibility for your agent, and you may revoke the powers of attorney whenever you want so long as you are mentally capable of doing so.
Durable powers of attorney for finances and healthcare take potentially confusing and difficult situations, where you have become incapacitated or are incapable of making decisions for yourself, and clearly name a person to make decisions for you. These documents are vital for ensuring your well-being and financial stability if the unexpected occurs.
If you are interested in creating a durable power of attorney for healthcare or finances, or a living will, please contact the Law Offices of John Mangan today and let us walk you through the process and ensure the document will be valid and enforceable if anything ever happens to you.