Power of attorney ("POA"), is a legal document that allows an individual to act on another person’s behalf if they are unable to do so. These powers can include the right to manage finances your finances and other aspects of your life when you are unable to do so.
Generally, when working with clients, the three common areas of focus are 1) how much authority do you want to give to your power of attorney, 2) when should the power become effective, and 3) who would make a good power of attorney.
How Much Authority to Grant?
There is no one size fits all answer, and it specific to each client. While the powers you can grant are numerous, we usually start with the terms of a general or specific grant of power.
Just as it sounds, a general power of attorney provides great latitude to your power of attorney to manage your affairs and allows them to step into your shoes. A specific power of attorney on the other hand is very prescriptive as to what aspects of your finances the power of attorney can manage. This could include only certain tasks like paying bills or selling a house.
When Should the Power of Attorney Become Effective?
Typically, the simplest choice is to have the Power of Attorney become effective immediately. Another, less common approach, is have a springing power of attorney. Springing means that at some defined point the powers are granted. Typically, when 2 of a panel of 3 health professionals determine that you are no longer able to make decisions for yourself.
Who Would Make a Good Power of Attorney?
You should only grant power of attorney authority to someone that you have implicit trust in. Typically, clients will name their spouse as power of attorney, and then their children as successor power of attorney.
A good power of attorney does not need to have any specialized financial skills but should again be someone that you know will have your best interests in mind and will make sure that your wishes are being honored.
Why Should I Have a Power of Attorney Drafted?
In the absence of proper incapacity legal planning, your loved ones will need to initiate a court procedure known as a guardianship or conservatorship. This is a complex and expensive process and many times decisions are made for you that you would not have made.
Anyone who is 18 years of age or older should consider creating a power of attorney. Helping to care for someone who is incapacitated brings many challenges and having a well drafted power of attorney will help ensure that your spouse or other caregiver has the authority to make decisions on your behalf thereby making their tough job easier.
A bit about us – Matt Devitt Law is a full service estate planning law firm located in Livonia, MI. In addition to estate planning we also provide legal counsel for small businesses and off a full suite of real estate legal services as well.
We work with our surrounding community nearby Livonia, Northville, Plymouth, Novi, Farmington Hills, and beyond. Our focus is on providing pragmatic value based solutions for your estate planning, small business, and real-estate legal needs. Give Matt a call (734) 335-0713 for a free consult.