Senior Living News

What Is Power of Attorney?

A power of attorney is a legal document authorizing one person to act on behalf of another. The person who creates the power of attorney is the principal. They authorize a specific person, called an agent or attorney-in-fact, to make decisions on their behalf in designated situations. Those situations depend on the type of POA you have.

You create a power of attorney for yourself. Therefore, you have to be of sound mind at the time you sign the document. A loved one can't get power of attorney over you once you're incapacitated. That's why planning ahead and handling these types of legal decisions while you're in good health is beneficial.

Types of Power of Attorney

Power of attorney falls under different categories based on how it works. Here are some common categories and types of POA documents:

• Financial power of attorney. This legal document pertains to financial and business activities should the principal no longer be able to make financial decisions. It gives the agent the power to sign and deposit checks, file taxes, make withdrawals and handle other financial tasks.
• Health care power of attorney. With this legal authorization, the agent makes health-related decisions for the principal when they can't make their own decisions. For instance, if the person is severely injured, the POA goes into effect.
• General power of attorney. When you choose this type of POA, your agent can handle all types of decisions as allowed by the law.
• Limited power of attorney. You also have the option to limit the POA to specific tasks, such as filing your taxes or managing your retirement accounts.
• Durable power of attorney. In this type of POA, the agent retains authorization to make decisions even if the principal becomes incapacitated.
• Springing power of attorney. This document specifies when the authorization to make decisions goes into effect. It might list specific events or define how incapacitated the principal must be for the agent to take over decision-making power.

When to Get Power of Attorney

Everyone can benefit from a power of attorney, especially as they get older. You never know if you'll become incapacitated suddenly by an accident, disease or injury. It also goes into effect if you begin to decline mentally and can't make decisions or don't understand your options. You need to be mentally competent when you sign the document, so handling it now ensures you can get your POA.

Some situations might spur you to speed up the process. For instance, if you just received a terminal health diagnosis, putting power of attorney in place ensures someone you trust can make your medical decisions as you decline. It's also important if you have family conflict or strained family relationships. Should you become incapacitated, the family members might fight over your decisions and drag the situation out in court. By creating a legal document, you eliminate those potential fights and the risk of someone you don't trust making decisions on your behalf.

Benefits of Power of Attorney

When you're still living independently, you might not think about how your condition could change in the future. But now is the time to make decisions, while you're still clear-headed and know what you want. Benefits of getting a power of attorney include:

• Peace of mind. By deciding on a power of attorney now, you can relax knowing your decision-making is in good hands should you lose the ability to do so for yourself. This knowledge can help you enjoy your independent living years.
• Financial stability. By designating a financial power of attorney, you support your financial stability. It ensures your bills get paid on time and all your finances remain in order.
• Temporary help. Incapacitation isn't always permanent. An accident might render you temporarily incapacitated and necessitate the use of the POA. Your loved one makes decisions for you during this time and keeps your finances in order until you're well and independent again. This helps you transition back into independent living with less stress for temporary setbacks.
• Less stress for family. Should a situation arise where you're incapacitated, your family doesn't have to fight to make decisions for you or waste time in court. They can easily take over your decisions so your care is seamless.
• Protection of your wishes. Setting up power of attorney is a good conversation starter with the person you choose as your agent. It gives you a chance to express your wishes so you're more likely to get the care you want.

Working with an attorney helps you better understand a power of attorney and decide on the best type for your situation. Take time deciding who to appoint as your agent, and review your power of attorney documents regularly to ensure they're still accurate.

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