Estate planning is more than just dividing assets to beneficiaries after your passing. There are estate planning tools that were created to protect you and the people and things that matter to you most even while you’re still alive. Establishing power of attorney for a variety of situations is a great addition to a comprehensive estate plan. This article will explore the different powers of attorney, and their best uses.
When To Use Power of Attorney
Power of attorney (POA) is a legal document that allows someone, the “principal,” to grant authority to another person, the “attorney-in-fact,” to act on their behalf in legal and financial matters. The principal can give the agent broad or limited powers, depending on their needs and preferences. Here are some examples of different powers of attorney and their potential best uses:
General Power of Attorney: The agent can potentially have broad authority to act on behalf of the principal in any legal and financial matters, including managing bank accounts, paying bills, and selling property. The authority granted under a general POA typically ends if the principal becomes incapacitated or dies. This type of POA works well for business and health matters.
Durable Power of Attorney: A durable POA is similar to a general POA, but it remains in effect even if the principal becomes incapacitated or unable to make decisions. This type of POA is useful for situations where the principal wants to ensure that someone can act on their behalf if they become unable to do so. This is often applied for adult children caring for their elderly parents suffering from dementia or other incapacitating illnesses.
Limited Power of Attorney: For a limited POA, the agent is granted the authority to act on behalf of the principal in a specific transaction or for a limited period of time. For example, a limited POA could be used to grant an agent the authority to sell a particular property or manage a business interest for a specific period of time. This type of POA works well for long-distance real estate transactions and business matters.
Springing Power of Attorney: A springing POA only becomes effective when a certain condition is met, such as when the principal becomes incapacitated. This type of POA can be useful for people who want to ensure that someone can act on their behalf if they become incapacitated in some way, but do not want to grant broad authority until that time.
Medical Power of Attorney: A medical POA, which is sometimes referred to as a health care proxy. This grants an agent the authority to make medical decisions on behalf of the principal if they become unable to do so. This type of POA is often used in conjunction with a living will or advance directive to ensure that the principal’s wishes regarding medical treatment are followed.
Establishing Power of Attorney
POA documents can be customized to meet any of your unique needs. They are also flexible enough to grant as limited or broad authority as desired. They can easily be revoked or amended at any time, as long as the principal is not incapacitated, making them an ideal tool to have on-hand. It is important to discuss your plans for creating a power of attorney with someone you trust. They will potentially have significant authority over your affairs and should be consenting and capable of carrying out your wishes.
Creating a comprehensive estate plan should include some form of power of attorney in case of an emergency. Speaking with a legal team that is experienced in estate planning and working with powers of attorney should be your first step to finding solutions that work best for you. To start your estate planning journey, contact the Kentucky Estate Planning Law Center by calling (270) 982-2883 and schedule a consultation today.