A power of attorney is a document that is used to name someone who may act in your behalf in a legally binding manner. There are different types of powers of attorney.
General Powers of Attorney
With a general power of attorney, you give someone sweeping power to make decisions on your behalf. However, this type of power of attorney become invalid if you were to become incapacitated.
Limited Powers of Attorney
With a limited power of attorney, you give someone the ability to act on your behalf only on a limited basis, such as the ability to represent you in a single transaction. Likewise, this power of attorney become invalid if you become incapacitated.
Durable Powers of Attorney
Estate planning typically involves the use of durable powers of attorney because planning for your incapacity is an important element to an estate plan. Unlike standard powers of attorney, durable powers of attorney remain in effect even if you become incapacitated. In that event, your named agents are authorized to act on your behalf.
Additionally, a durable power of attorney can be designed to “spring” into effect only in the event you become incapacitated. This feature prevents your designated agents from possessing any powers to act on your behalf until such powers are needed.
Who Can Create a Power of Attorney?
You can create a valid power of attorney provided you are an adult and are mentally competent. It is vital that you are competent at the time you execute your durable power of attorney to ensure your designated agents are empowered to make decisions on your behalf if you become incapacitated. Therefore, you should create your durable power of attorney as early as possible to avoid any questions regarding your mental capacity at the time of execution.
If you do not appoint agents to make decisions on your behalf prior to your incapacity, a guardianship could be required. A guardianship is a court proceeding in which the court appoints a guardian to assume control of your affairs after you are no longer able to make your own decisions.
Fortunately, you don’t have to leave such a decision in the hands of the court. Instead, you can appoint your preferred agents in a durable power of attorney and avoid having the guardianship process.
If you have not yet taking steps necessary to protect yourself in the event of incapacity, feel free to contact our firm to schedule a free consultation.
Parman & Easterday