A Power of Attorney (POA) is a lifetime estate planning tool that allows you to appoint and authorize someone (agent) to act on your behalf in the event you become incapacitated. Your unavailability can be due to several reasons but is most commonly a result of you becoming sick or disabled, either temporarily or permanently.
It is not a requirement to have a POA, but without one, you and your family could find yourselves in a bind during an unexpected occurrence.
Here are some suggestions to consider:
• What can I authorize an agent or agents to do? Manage your financial affairs; collect your debts; manage your business; buy or sell things such as personal property and real estate, etc.; make banking transactions; file a lawsuit on your behalf; make gifts on your behalf.
• Who should I choose as a POA?
There are various traits to consider when selecting an agent (or agents). Your agent is a fiduciary and owes a duty of loyalty to you. Consider selecting someone who is 1. trustworthy, 2. able and available, and 3. close in proximity.
• When does a POA take effect and how long does it last?
There are several different types of POAs that can be used for different purposes. Typically, there are four main types:
Limited. Gives authority to someone for a very limited purpose. For example, to attend and handle a real estate closing. A Limited POA usually contains a specific end date.
General. A General POA is very comprehensive and usually gives your agent all the powers and rights that you have. This type of POA may grant your agent the powers to sign documents for you, pay your bills, and conduct other financial transactions. A General POA ends upon your death or if you become incapacitated.
Durable. A Durable POA can be either general or limited in scope. The difference between a Durable POA and a General POA is that a Durable POA remains in effect even after you become incapacitated. It is meant to be effective upon the date that you sign and remain in effect during your lifetime unless you revoke the POA prior to becoming incapacitated.
Springing. A Springing POA doesn’t become effective until you are incapacitated. A triggering event must occur, allowing the agent to step in. The standards determining incapacity and the triggering event must be clearly defined and outlined in a Springing POA. Your family may be presented with some challenges with this type of POA.
• Can a POA be canceled?
Yes – this is called revoking the POA. To revoke a POA, a notice will need to be provided to the agent(s), and if the POA has been recorded, a notice of revocation should also be filed.
• What is the alternative if I don’t have a POA and become incapacitated?
Without a POA, your family may likely have to file a “guardianship” or seek conservatorship. Your family or loved ones will have to seek authority from the court and request that the court appoint a guardian over you, which is very tedious and expensive.
It is important that you give your loved ones the tools selected by you, to help you if or when you cannot help yourself.
Jada L. Gaines is an associate attorney with Elder Law & Estate Planning Center in Bluffton. hiltonheadelderlaw.com