Giving a trusted person your power of attorney can make the idea of being unable to make your own financial or health decisions a little less scary. This document gives another person (called your agent or attorney-in-fact) the power to handle financial and/or health care decisions on your behalf.
For estate planning, the durable power of attorney offers the best protection. It goes into effect when you sign it, stays in effect if you become incapacitated, and expires only when you die or revoke it. You can create one using Avvo's power of attorney form.
Another option you can consider is a springing durable power of attorney. It "springs" into effect when a specific event happens, like being declared incompetent. If you do this, make sure you clearly define the event—or your agent may need to get a court order to act on your behalf.
A non-durable power of attorney, on the other hand, expires if you become incapacitated. It’s useful for accomplishing specific, short-term goals, but not for estate planning purposes.
A power of attorney must be signed in front of a notary public, and possibly additional witnesses, depending on your state’s laws.
You can revoke the power of attorney at any time as long as you are still competent to make decisions. However, you may have to give your agent written notice if you do so.
For full protection, you should have two different powers of attorney: one for finances, and one for health care.
A financial power of attorney gives your agent the authority to do things like pay your bills, manage your investments, and file your taxes.
You can give as much or as little access to your finances as you wish. Keep in mind your agent will need full (or nearly full) access if you do become incapacitated. Otherwise, there may be things he or she can’t do for you.
This document allows your agent to direct your medical care if you are unable to do so.
To help ensure your agent knows your treatment preferences, you can also create a living will outlining how to handle different situations. Many states let you combine your living will and the durable power of attorney for health care into one document, often called an advance health care directive.
An attorney-in-fact can be almost anyone, as long as the person is an adult and not mentally incapacitated. Just be sure it’s someone you trust.
The same person can hold both your financial and health care powers if you wish. It’s a good idea to also name a successor agent, in case your original choice can’t or won’t do it when the time comes.
While creating a power of attorney is fairly simple, it's important to make sure things are done right. You may want to have an estate planning lawyer look over your document to be safe.