The process of estate planning may seem overwhelming to many families. They may know that a thorough estate plan is important, and be aware that there are a number of different important considerations and documents that may be included in the process, but may not always know what each estate planning tool refers to. One estate planning tool you may have heard of but wondered about and wanted to know more about is a power of attorney.
In general, a power of attorney provides for another person to act on your behalf as your agent. The power of attorney may be general or may be limited to a specific transaction, for instance. It may also extend temporary or permanent authority to act on your behalf. A power of attorney may immediately take effect or may be established to take effect if a future event, such as your medical incapacitation or disability, takes place.
The party given the power to act on your behalf becomes your agent and has the ability to act on your behalf according to what is specified in the document. A power of attorney can be an extremely useful estate planning tool to provide for circumstances when you may become incapacitated by allowing a designated family member, or family members, to act on your behalf in a number of important respects. It is important that the document defines the powers of the agent and the circumstances when they can act on your behalf.
Powers of attorney can be revoked, however, revocation usually requires written notice to the agent or party named to act for you. In most circumstances, the agent will be required to provide the power of attorney document to act. In some states, powers of attorney may expire, however, a durable power of attorney does not expire and remains valid expect in circumstances of proper revocation or death. While powers of attorney are accepted in all states, the rules may vary by state so it is important to understand the relevant rules in your state.
Establishing a power of attorney as part of a thorough estate plan allows you to determine who you want to act for you, and in what circumstances and situations you want them to act, without the need for a court to do so later on. Because a power of attorney is an important consideration, it is helpful to understand what a power of attorney is and to carefully consider selecting someone you trust and what powers you want them to act on your behalf.
Source: American Bar Association, “Power of Attorney,” Accessed May 28, 2015