CENTER FOR ESTATE PLANNING

Powers of Attorney

A power of attorney is a legal document in which a person (known as a principal) designates and authorizes another person to act as their agent or attorney-in-fact to make decisions on his or her behalf.  The agent under a power of attorney can usually do anything that the principal can do for himself or herself and,  as a result, the agent can make decisions that are legally binding on the principal.  There are several types of powers of attorney.  A general power of attorney grants broad, general authority to act on behalf of the principal.  Much of this authority is set forth by statute, although the principal,  based upon their own situation,  may have other needs that will be covered in the authority granted.  The other type of power of attorney is a limited power of attorney.  This type of power of attorney is limited to acting in a particular circumstance, such as granting someone the authority to attend a real estate closing for the principal when that principal is out of town.  The power of attorney is a very useful estate planning tool, especially when coupled with a revocable trust.  If you are interested in drafting a power of attorney, contact our firm to schedule a consultation with an estate planning attorney.

Durable Power of Attorney

As a general rule, the authority granted under a power of attorney terminates at the time of the principal’s incapacity or death.  There is a certain type of power of attorney, known as the durable power of attorney, which is a document that remains in effect even when the principal is incapacitated.  This type of power of attorney allows the agent to make critical decisions at a time when the principal is unable to manage his or her financial, medical or other affairs.

Power of Attorney for Health Care

A power of attorney for healthcare is also known by a number of other names such as:  a medical directive, an advance directive, a written directive or a durable power of attorney for healthcare.  This document allows the agent to make healthcare decisions for the principal when that person is unconscious, in a coma, or a terminal state.  Using this document, the agent can discuss with the various medical professionals the circumstances surrounding the principal’s medical condition and make appropriate decisions about the principal’s continued care.  The power of attorney for healthcare contains the preferences that the principal desires at such time as the principal is deemed to be in a terminal state by the principal’s physician.

Powers of Attorney for Financial or Property Transactions

A power of attorney is used most times to grant a person the authority to manage his or her finances (although the use of a living trust is probably a better vehicle for this purpose), to buy or sell property, and handle other legal transactions on the principal’s behalf.  This power of attorney may have a provision that allows the agent to continue to make gifts, if the principal has been making gifts to family members each year.  The power of attorney usually does not allow the agent to prepare and execute a will, vote or seek a divorce.

Conclusion

Powers of attorney are integral parts of the estate planning process and provide protection for the principal during his or her lifetime.  These are normally coupled with other estate planning documents that provide for distributions after the death of the principal.  If you have questions about powers of attorney or other estate planning tools, contact our firm to schedule a consultation with an estate planning lawyer.