At Carroll Estate Planning LLC., we know that a comprehensive estate plan includes having valid powers of attorney that ensure you have someone you trust to make financial and medical decisions on your behalf if you become unable to make those decisions for yourself. We provide superior service to clients throughout the greater Milwaukee area and Lake Country, and we are ready to ensure that your interests are protected in life and after death.
A power of attorney (POA) is a legal document that authorizes a named individual, the agent, to act on behalf of the principal. The principle designates a person to assist them with managing their affairs and/or step in to make financial and medical decisions if the principle becomes incapacitated. Having a valid POA is an important part of your estate plan because it allows you to choose who will manage your affairs and make decisions on your behalf should it become necessary during your life.
Without powers of attorney (POAs) in place, if you become incapacitated and unable to make decisions for yourself, you may be at the mercy of the courts to appoint a guardian or conservator to make those decisions for you. Initiating a guardianship or conservatorship through the legal process can be an expensive undertaking and will likely involve a court overseeing the management of your affairs. Further, the person the court appoints, may not be the person you would have chosen if you were able. Planning ahead for the possibility of incapacity by executing appropriate powers of attorney allows you to make the choice and to choose a trusted individual to act as your power of attorney if necessary.
Types of Power of Attorney
There are many options when it comes to establishing a power of attorney. At Carroll Estate Planning, LLC, we work with you to ensure that you have the right power of attorney for your specific situation. Typical types of Power of Attorney documents include:
- Financial Powers of Attorney: A financial power of attorney allows you to grant an individual or individuals the power to manage all or part of your financial affairs.
- Durable Power of Attorney: A durable financial power of attorney is the common power of attorney used in estate planning. Once properly executed by the principle, it takes effect immediately and continues to be effective even if the principle becomes incapacitated. This type of power of attorney allows the agent to act immediately and is very useful for situations where the principle is not incapacitated but simply needs help managing their finances yet remains effective if incapacity occurs.
- Standby Durable Power of Attorney: This type of POA is similar to the durable power of attorney in that it survives incapacity, however, it does not become effective until a future date or upon the occurrence of a future event or contingency. Most often this type of POA is used by younger clients who only wish for their agent to be allowed to act on their behalf if they become incapacitated.
- Limited Power of Attorney: Although you can customize the amount and type of authority you grant your attorney-in-fact, through any POA document, a limited power of attorney is one in which you grant authority which is limited in time and/or limited to a specific matter. For example, if you are selling your home but not able to attend the closing, you can create a limited power of attorney to appoint an agent to represent you at the closing.
- Medical Power of Attorney: Also commonly referred to as a Healthcare Power of Attorney, this document designates a person who knows you and knows what your wishes are with respect to medical care to make health care decisions on your behalf if you become incapacitated and unable to make those decisions for yourself.
Power of Attorney FAQs
Why Are Financial and Health Care Powers of Attorney An Important Part of a Comprehensive Estate Plan?
Most people think that estate planning involves only planning for death. However, The odds of becoming disabled for a short period are higher than most people think. ( link to - https://www.affordableinsuranceprotection.com/disability_facts) Powers of attorney are essential to making sure your assets are protected and your health is provided for if you become unable to manage these affairs during your life. The alternative is hoping that a family or friend steps up and seeks a guardianship or conservatorship through the courts, which takes time to accomplish and is burdensome, expensive and public.
Who Can Be Named A POA?
Other than some restrictions related to naming health care providers who are not family as health care agents, you can name any competent adult to serve as your agent for health care and finances. However, with respect to financial powers of attorney, traits such as honesty and trustworthiness are extremely important. With respect to healthcare powers of attorney, naming someone who understands and is able to enact your wishes, especially if those wishes include refusing life sustaining procedures can be very important. It is also important to consider whether your agent has the time to undertake these obligations and whether geographic location may be an issue.
What Authority To Act Does My POA Have?
Generally, the agent’s scope of authority is set out in the power of attorney document and can be extremely broad or very limited. For example, a financial power of attorney can include managing bank accounts, paying bills, buying and selling real estate, stocks, bonds and commodities. It can even include the power to make gifts on your behalf.
What Are My POA Agent’s Obligations To Me?
Agents are obligated to act within the scope of the authority granted by the relevant POA document. For example, a healthcare POA may not admit you to a nursing home for long-term care unless it is authorized in the document. With respect to financial powers of attorney, the agent has a fiduciary duty to the principle which requires that their actions be taken in the best interests of the principle and that the agent act with honesty, integrity, loyalty and care.
What is the Difference Between a Guardianship and Power of Attorney?
A power of attorney does not require the involvement of courts while a guardianship can be a lengthy and costly court proceeding. There is also the possibility of the courts appointing a guardian who is not familiar with the individual or family at all. With a power of attorney, you can appoint someone you know and trust to handle your affairs.
I Have A Trust That Names A Successor Trustee If I Become Incapacitated, Do I Still Need A Financial POA?
Yes. A successor trustee will only have authority to act on your behalf with respect to property that is held by the trust. Commonly, assets such as retirement accounts are not held in trust and the trustee would not have authority to manage those types of assets. Additionally, a trustee would not have the ability to sign documents such as tax returns on your behalf.