Why Everyone Should Have a Power of Attorney

Granting someone power of attorney (also known as designating an attorney-in-fact) is the legal process by which the person granting the power (principal) gives another person (agent) the legal authority to act for the principal.  Powers of attorney can vary widely in their scope and function.  As a part of a minimal estate plan, everyone should name a financial power of attorney and a medical power of attorney.

A financial power of attorney gives an an agent authority to  manage the principal’s finances and property.  With a broadly drafted financial power of attorney (also called a general power of attorney) an agent can transact business on the principal’s behalf and access financial accounts.  A medial power of attorney allows an agent to make medical decisions for the principal in the event the principal is unable to do so.

For basic estate planning purposes is is almost always appropriate to make the powers in both a financial and medical power of attorney durable.  A “durable” power of attorney allows the authority of the agent to continue even after the principal is incapacitated by an accident or illness.

Absent a durable power of attorney, loved ones may have to go to court to obtain a guardianship or conservatorship in order to make decisions or manage the affairs of an incapacitated individual.  Guardianship and conservatorship proceedings are public and can be lengthily, and costly.  Like all Court proceedings, there is no guaranty what the outcome might be.  By contrast, a durable power of attorney can be done quickly, making the principal’s wishes known and at a fraction of the cost of a court proceeding.

Executing a power of attorney does not deprive the principal of the right to make decisions on his or her own behalf.  Practically speaking, a principal may execute a power of attorney and continue manage their own affairs and make their own decisions for years.  The power of attorney acts as a safety net and is there if needed.

Choosing who to act as an agent is an important decision for the principal. Whomever is chosen will have a great deal of power to make decision for the principal.  A broadly drafted power of attorney essentially allows the agent to step into the shoes of the principal and do anything the principal could do.  Trusted family members are an obvious choice for such a responsibility, but the agent does not have to be a relation. The same person who may be a perfect chose to hold a medical power of attorney may not be a good agent under a financial power of attorney.

Because a power of attorney is a legal document with far reaching consequences it is preferable that it be drafted by an attorney who can tailor the document to the principal’s individual circumstances.