Perhaps one of the most commonly misunderstood terms people encounter when they create an estate plan is “attorney-in-fact.” An attorney-in-fact plays an essential role in almost every estate plan, regardless of the individual needs or desires of the person creating that plan. Understanding what an attorney-in-fact is, what role they play in an estate plan, and what you, as a person who creates an estate plan, should do about an attorney-in-fact is essential. Today we are going to take a look at the term, the role of the attorney-in-fact, and why it’s so important.
Your Attorney-in-Fact
When you set about creating an estate plan, you have to choose people to serve specific roles in that plan. Attorneys-in-fact are individuals or organizations that can make a wide variety of decisions on your behalf, including everything from financial choices, to medical decisions, and even child or parenting choices.
You, as the principal, choose who you wish to serve as your attorneys-in-fact by creating a document called a power of attorney. The power of attorney appoints your attorney-in-fact and identifies the kinds of decision-making authority you want that person to have.
Your Attorney and Your Attorney-in-Fact
The confusion surrounding attorneys-in-fact arises because of the word “attorney.” An attorney-in-fact has nothing to do with lawyers or attorneys at law. A lawyer is a person who has gone to law school, taken the bar exam, and is licensed to practice law by the state. An attorney-in-fact, on the other hand, is simply a person who you have given the legal authority to make decisions on your behalf or on behalf of someone else, such as a minor child.
When you appoint an attorney-in-fact, that person does not have to be a lawyer, nor do you have to be a lawyer to make a power of attorney. The person you name as your attorney-in-fact does not receive any right or ability to practice law.
Because powers of attorney are legal documents, it’s always better to ask your personal attorney to create these documents for you and to advise you about how best to use them.
Your Attorney-in-Fact and Your Power of Attorney
A power of attorney is the document through which you, the principal, appoints your attorney-in-fact. The power of attorney must comply with state laws and has to include key pieces of information, such as the decision-making authority you want to give your attorney-in-fact. You will have to sign your power of attorney document and make sure to keep it up-to-date if and when your needs or circumstances change. Most must be notarized and may require additional witnesses. As a final note, we recommend your powers of attorney be reviewed every five years as some institutions may refuse to accept them if they are too old.
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