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Give power of attorney to someone you trust

Decide who will take care of things if something happens to you.

What is a power of attorney?

A power of attorney is a document that authorizes a person you trust to handle certain decisions if you are unable to. It is also called a POA or letter of attorney.

There are generally two parties involved: the person giving the authorization for power of attorney (the principal), and the person who receives the authorization (the agent). Don’t let the word 'attorney' confuse you—this person doesn’t need to have any legal background.

You can choose someone you trust to handle your finances and medical care in case you suddenly are unable to.

If you become incapacitated without a designated power of attorney, the court may appoint someone to make medical or financial decisions for you. That person might make decisions that go against your wishes.

Designating someone gives this responsibility to someone you trust. You can also put limits on the actions your agent can take.

The timing is up to you. But if you’re planning for the future, it’s a good idea to plan for any possibility—including an unexpected illness or injury.

It’s also a good idea to create one if you’ve been having health problems or know you’ll be away from home for an extended time.

The sooner you create a POA, the sooner you are protected.

What are the different types of power of attorney?

Medical power of attorney

A medical power of attorney appoints someone to make health care decisions for you if you are ever unable to do so yourself. It is part of your health care advance directive, along with your living will (which may be part of the same document).

Financial power of attorney

A financial power of attorney gives your agent the ability to handle financial matters. You can choose to give your agent power over all your finances or just specific tasks. A financial power of attorney can be either 'durable' or 'non-durable.'

Durable power of attorney

A durable POA gives your agent power immediately upon signing, and it continues even if you’re incapacitated. It only expires if you die. You can choose to have it take effect only under certain conditions, such as if you become incapacitated (called a durable springing power of attorney).

Non-durable power of attorney

A non-durable POA lets you name someone to accomplish a specific task, like signing a contract while you’re out of the country. It takes effect when you sign it and expires once the task is finished. It also expires if you become incapacitated, so if you were injured before the contract got signed, it could only be signed by someone with your durable power of attorney.

Non-durable vs. durable power of attorney

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.

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 it 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.

Understanding the role of agent

The person who you give power of attorney to is called the agent or attorney-in-fact. The agent’s job is to make decisions on your behalf, if you are unable to make them yourself. The agent needs to either act according to your directions, or in your best interests if you are unavailable.

Agents are bound by the document, which can be revoked if the principal decides to do so.

Duties of an agent

Often, the agent will help you with financial or legal transactions. This could include paying bills, signing important documents, and managing day-to-day finances. You may also need the agent to handle real estate settlements, asset transfers, or your healthcare.

In regards to health, your agent might arrange for benefits or insurance coverage on behalf of you as the principal, or make important treatment decisions. This may even include whether to continue life support when death is imminent—a decision often made with the help of an advance directive or living will.

Who can be given power of attorney?

An agent 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.