Power of Attorney

A Power of Attorney, or POA, is a legal document that allows an individual, the 'principal,' to authorize another person, the 'agent' or 'attorney-in-fact,' to make decisions and take actions on their behalf.

It allows the agent to act on your behalf when you are not in a position to do so yourself.

This can be due to the principal being:

• Physically incapacitated
• Mentally incapacitated
• Located in a different country

You may also simply want to create a POA to delegate specific tasks. Based on the reason a specific type of Power of Attorney Document should be created, such as one that covers medical or financial legal decisions.

The rest of this article will explain the ins and outs of a Power of Attorney, how to create one, revoke a POA, and more critical information.

Understanding How a Power of Attorney Works

If you create a Power of Attorney, it’s essential to completely understand how the legal document works.

By knowing how to assign authority correctly, you’ll be able to ensure that your legal preferences will be respected.

Here are some of the crucial points to be aware of to fully understand how this legal document works.

• Establishing roles: In a Power of Attorney, the 'principal' is the person who creates the document and appoints an 'agent.' The agent is given the authority to make decisions on behalf of the principal.
• Types of POA: There are various types of Power of Attorney. Each gives the agent different levels of authority, from handling wide-ranging matters.
• Powers given to the agent: Depending on the type, the agent can make financial decisions, handle business transactions, make healthcare decisions, or carry out specific tasks as outlined in the document.
• When POA becomes active: A Power of Attorney can take effect as soon as it's signed, or it can become active at a later point, like if the principal becomes incapacitated. This is known as a 'springing' Power of Attorney.
• Ending a POA: A Power of Attorney can be terminated if the principal decides to revoke it, passes away, or if the agent is unable or unwilling to continue in their role and there's no backup agent named.

When taking all of these points into account and when you start to create your document it’s also normal to ask yourself “How much does a Power of Attorney cost?”

That will depend on the method you choose to draft your document, some methods can end up being expensive.

However, you can use our POA template to create your document and avoid hefty legal fees.

While applying all of these elements to create a valid POA can be a major effort, it can offer you peace of mind knowing that your matters will be taken care of for you.

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The Importance of Having a Power of Attorney

Arguably the main benefit of creating a POA document and assigning an agent you’ll be able to take care of any future dilemmas if you are physically unable to.

Without the document, a court may need to step in and make crucial decisions regarding your financial or medical affairs.

With the document, you will be able to:

• Designate someone you trust to handle your affairs
• Avoid guardianship proceedings
• Ensure your wishes are followed
• Avoid family conflicts

By creating the document and discussing your preferences your POA can be a powerful tool that can help guarantee that any circumstances that arise will be taken care of your way.

Additionally, using specific types of Power of Attorney documents can make this task even easier.

Exploring the Different Types of Power of Attorney

Depending on your circumstances your document can focus on certain aspects of your life you should draft a specific type of Power of Attorney.

It’s a good option to create more than a single type of POA which ultimately gives you more control over your health and assets.

Review this breakdown of the main documents that you could use:

• Medical Power of Attorney: Allows your agent to make medical decisions for you if you are unable to do so during a medical emergency.
• Durable Power of Attorney: Gives your agent permission to handle your financial affairs if you are unable to do so due to incapacitation, travel, or inability to handle complex financial matters.
• Child Power of Attorney: Enables parents to grant temporary parental authority to someone else. This is useful if a parent or parents are unavailable for any reason and cannot properly watch after their child.

Whichever document or documents you decide to use it’s critical that both you, your agent, and your family are well aware of your wishes. For agents, it’s also essential that they recognize their duties and the rights that have been granted to them.

Choosing the Right Agent for Your Power of Attorney

When it comes time to answer the question “Who can I appoint as my agent?”, taking the time to select your agent may not be easy. There could be many people that may seem like they can be the perfect match.

However, it will be key that they check the following boxes:

• Trustworthiness: Your agent should be someone with high integrity, who you deeply trust.
• Alignment with your wishes: They should understand and respect your values and preferences.
• Capability: Choose someone capable of fulfilling the responsibilities outlined in the POA.
• Availability: The individual should be accessible and ready to act when needed.
• Willingness: Ensure they are willing and prepared to take on the role.

If you’re able to think of someone that covers all these bases you shouldn’t doubt in asking them to be your agent.

What Families Need to Know About Power of Attorney

Within a family, it is always essential that everyone makes certain that the other members are taken care of. That’s especially true when we face the reality that our parents and grandparents are getting older.

Encouraging any older members of your family to create a Power of Attorney and other important legal documents such as a living will, can help protect them from any eventuality.

Some families have active military members who cannot always be around for their children.

In these cases, it’s a wise choice to create a POA document that follows the laws of the state you reside in.

Review the following groups who are in most need of a Power of Attorney created for them to better understand how and why you should help those members of your family.

Power of Attorney for Elders

As people age, they may experience physical or cognitive health issues that can interfere with their ability to manage their affairs.

In these cases, a family member can be designated as an agent through a POA, ensuring that financial matters, healthcare decisions, and other significant issues are taken care of according to the wishes of the elderly individual.

Power of Attorney for Military Personnel

If you are or have an active service member in your family a Power of Attorney should be created.

Military personnel often need to grant POA before being deployed, allowing someone they trust to manage their affairs back home.

The agent can handle financial transactions, address legal matters, and even make medical decisions in the event of injury overseas.

Power of Attorney for Minors

Parents can’t always be there for their children. If you find yourself in one of these situations and will not be able to care for your child, it’s best to create a Child Power of Attorney:

• You are in the military
• You need to undergo surgery and recover
• You have a long business trip upcoming
• You are facing a prison sentence

If one of these applies to you, it would be in the best interest of your child or children to designate authority to someone you trust for a temporary period to make any critical choices.

Power of Attorney vs. Guardianship

Anyone setting up a Power of Attorney likely has wondered if establishing a guardianship would be better.

After all, a legal guardian fulfills many of the same duties as an agent.

However, there is a significant difference between guardianship and POA, which you can examine in the table below.

If you prefer to choose the individual who will handle your affairs, in that case, creating a Power of Attorney would be the better option.

When it comes to guardianship, the court will keep an eye on the legal guardian. This means they will need to keep financial records that prove they are managing your property, finances, or healthcare properly.

How to Set Up a POA

Since a Power of Attorney is a complex document you must know each of the main steps for creating the document correctly.

The first step you’ll need to take is to decide on the type of POA: The first step is to determine the kind of POA you need.

Once you know exactly the type of POA you are creating there are 3 more key steps that need to be carried out.

1. Select your agent: Carefully select the individual you want to act on your behalf. This should be someone trustworthy, who understands your values and is capable of making sound decisions.
2. Detail the powers granted: Clearly outline the powers you're granting your agent in the document. These could range from making financial transactions to making medical decisions, depending on the type of POA.
3. Sign the document: Once the document is ready, you and the agent must sign it in the presence of a notary public. Some states may also require a number of witnesses to be present.

These steps can likely be done without hiring a lawyer, however, once it’s completed it’s recommended to have one look your POA over to ensure that everything is legally valid.

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Uniform Power of Attorney Act

If you plan on moving to another state after your POA has been created you should ensure that you are going to reside somewhere that has adopted the Uniform Power of Attorney Act.

Moving to one of the states that have adopted the act would mean avoiding the need to make any changes to your Power of Attorney.

Since the Uniform Law Commission proposed the law in 2006, 28 states have adopted the act.

How a POA Can Be Terminated or Revoked

Power of Attorney documents are not permanent legal contracts. The typical ways that they can be considered expired or terminated include:

• Revoking the authority you’ve given to the agent
• Principal’s death

To revoke a Power of Attorney you will need to go through a simple process that terminates the original document’s authority.

1. Communicate your decision to your agent.
2. Formalize the decision with a letter that states why you are making the choice and the names of all parties involved.
3. Create a new POA document

If you don’t plan on creating a new POA to replace the old one, you should destroy the annulled document.

Family members can also end the document on the principal’s behalf by following the same process. However, if the agent refuses to step down you will likely need to sue them to force them to step down.