A power of attorney gives another person, your agent, the ability to act on your behalf if you become incapable of doing so.
An agent has the authority to decide your finances, manage your estate and control your healthcare, so you should have a complete understanding of this power before selecting this person.
There are different types of POAs
While there are various powers of attorney, you should consider the following three for estate planning:
- A springing power of attorney becomes effective when you become incapacitated. However, your agent may have to prove your inability to act for yourself, which can be difficult.
- A durable power of attorney comes into effect upon your signing the document and lasts until your death, or if you cancel it
- A medical POA begins when you cannot make decisions for yourself but may terminate should you return to good health. Your agent can only make health care decisions.
Powers of attorney protect your decision-making capabilities
You must create a power of attorney when you are in a sound state of mind. Choosing who acts as your agent while you have the ability to make that decision gives you the power to control who makes determinations for you when you no longer can. If you do not plan for these events, the courts may appoint a guardian, and you have no input in who that person is.
Creating a power of attorney is an essential estate planning tool that allows you to stay in control of your life when you can no longer make decisions yourself.