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What is Power of Attorney, and Should I Have One?

A comprehensive estate plan is advisable for all adults, especially those with any assets at all, those with children, and the elderly. One component to an estate plan is the Power of Attorney. Since we are in the home care industry, we are often asked “What is power of attorney exactly?” and “Should I have one?”

Please Note: We are not attorneys. While we believe it is wise to have a comprehensive estate plan, the following information is not intended to be taken as legal advice. Consult a licensed estate planning attorney for all matters related to your Power of Attorney and comprehensive estate plan.

What is Power of Attorney?

Power of Attorney is a legal document whereby you (the principal) give certain powers to someone else. This “someone else” MUST be someone you trust – say, a family member, close friend, or even your attorney.

Be aware, abuses of power can and do happen, so the designation of Power of Attorney is not to be taken lightly. The person you choose becomes the “attorney in fact” and acts as your agent – in other words, they are authorized to act on your behalf.

When does power of attorney take effect?

Power of Attorney becomes effective immediately; however, the attorney in fact cannot make decisions behind your back or without your approval. The relationship that exists is a principal-agent relationship, which means you still maintain control of your property and finances, and nothing can be done by your agent without your consent. (Unless you become incapacitated – see Durable Power of Attorney, below.)

What are the attorney in fact’s powers?

There are different types of Power of Attorney. When you talk to your estate planning attorney, be sure you understand the distinction between financial and medical POAs.

The Power of Attorney can basically be as broad or as limited as you want. For instance, if you’re going away on vacation and selling your house, you can designate Power of Attorney to someone to sign the papers for you. However, if you designate a Durable Power of Attorney, the agent will be authorized to act on your behalf for all financial matters, including when you become incapacitated (mentally incapable of making those decisions for yourself).

California recognizes “Springing Durable Powers of Attorney“, which means rather than taking effect immediately, it “springs” into action upon the occurrence of some designated trigger (which is often incapacitation).

An important note to discuss with your estate planning attorney is that some banks are reluctant to honor Springing POAs because of the ambiguity regarding when an individual is actually incapacitated. Consult with your attorney and check with your bank before deciding whether a Springing Durable POA is your best course of action.

It is always wise and prudent to prepare for events that, though they may be highly unlikely to occur, protect you and your family (and your assets) from a potentially complicated and unfortunate outcome. If you become unable to handle your own affairs, a Power of Attorney will allow someone else to do that in your place.

If you wait until you become unable to handle your affairs, you may not be able to execute the power of attorney documents. A Conservatorship proceeding will then have to take place through the courts – a lengthy and cumbersome process.

Disclaimer: We are not attorneys. This is not to be taken as legal advice. Please consult your estate planning attorney for all matters related to Powers of Attorney and your comprehensive estate plan. 

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