Power of attorney is a legal term that carries impressive weight but whose meaning is not immediately apparent. The experienced legal team at CJB Law has developed a guide that discusses what power of attorney is and explains a few of the most important things you need to consider when creating one.
Defining Power of Attorney
The term “power of attorney” refers to a legal document that allows one or more individuals to act as your agent or attorney-in-fact. Whoever you grant power of attorney can make decisions and perform transactions in your name within the parameters laid out in the document. Now that we have a general understanding, we will break it down further.
General vs. Special
There are two different types of power of attorney: general power of attorney and special or limited power of attorney. General power of attorney appoints and gives your agent the ability to perform any action on your behalf. Likewise, a special power of attorney authorizes specific powers limited to a particular area, such as financial or medical decisions. Your agents maintain their powers until such a time as you revoke their authorization, become incapacitated, or pass away. To extend your powers of attorney, both general and special can be made durable. A durable power of attorney ensures that if you cannot make important decisions, someone you trust is appointed to ensure your wishes are carried out and your best interests are maintained.
Who Should I Name as Agent?
When granting powers of attorney, it is essential to choose individuals you trust to adhere to your life wishes and act in your best interest. As part of your decision process, you should also think about what powers you intend to grant. If you create a special power of attorney authorizing decisions relating to your finances or business, it might be more effective to name your accountant or financial advisor as an agent rather than a well-meaning relative.
Similarly, sensitive medical decisions and medical directives that become relevant in case of incapacitation should be overseen by someone such as a spouse or close relative whom you trust absolutely to see that your desires are carried out. Not sure who would be best to represent you in a specific capacity? Our lawyers can answer any questions and guide you in the right direction.
What Can My Agent Do for Me?
Your agent can undertake any number of actions in your name, depending on the stipulations made in the power of attorney document. Below are a few of the most common actions:
- Oversee the execution of your estate
- Conduct large-scale financial transactions
- Buy or sell real estate
- Make decisions about medical care in case you are unable to
Estate Planning
One of the most important reasons to create powers of attorney is to assist in the planning and execution of your estate. Although it can be uncomfortable to consider end-of-life situations, advance planning is key to ensuring that your family is taken care of and can smoothly transition after you are gone. The estate planning process covers everything from determining assets and outlining gift beneficiaries to establishing family care and medical directives.
Creating one or more powers of attorney can help streamline the execution of your estate and instill peace of mind for you and your loved ones. After death, the estate goes into probate. The deceased’s last will is authenticated, outstanding debts are taken care of, income taxes are filed, and the estate is distributed.
To make your estate executor’s life easier, it can be helpful to create a durable financial power of attorney naming someone familiar with your finances as the agent. Doing so can help save your loved ones from dealing with any financial headaches that might arise during probate.
Financial Representative
Authorizing a financial attorney-in-fact has the added benefit of making your life easier by allowing a trusted individual to act in your stead in financial transactions. Your agent can sign for you in real estate transactions, manage your finances, and make financial decisions that lie within the scope laid out in a power of attorney, leaving you free to enjoy your time to the fullest. Remember to choose your agent carefully so that your peace of mind can be absolute regarding your financial well-being.
Medical Power of Attorney
As you begin estate planning with an experienced lawyer, it is vital to consider any end-of-life wishes you have concerning medical decisions. You will want to makes sure that if you become incapacitated, your wishes are carried out. Establishing a medical power of attorney appoints someone else to make decisions when you are unable to. Naming an agent can be especially helpful if you have concerns about loved ones respecting your desires around sensitive issues such as DNRs or advance medical directives regarding feeding tubes and life support.
Can I Create More Than One Power of Attorney?
The answer is yes! As mentioned earlier, you can create special powers of attorney. You can also appoint multiple agents under the same power of attorney. In such instances, you must determine whether each agent can act independently or if all agents must be present to take actions delineated in a power of attorney. You will want to make sure that if multiple agents need to work together, the individuals you choose can agree on any course of action.
Is My Power of Attorney Permanent?
General powers of attorney remain in effect until such a time as the powers are revoked or you become unable to make decisions through incapacitation or death. Durable powers of attorney are not affected by death or incapacitation, but you can revoke these actions at any time as long as you are of sound mind. In Minnesota, a power of attorney is not considered revoked until the designated agent has been notified of the revocation. Powers of attorney also end when the agent is no longer able to represent you competently.
Streamline Your Estate Planning Today
Creating powers of attorney is one of the best ways to streamline estate planning and make sure that someone you trust is designated to make them for you when you are unable to make crucial decisions. Every scenario is unique, so it is always a good idea to meet with an experienced lawyer to discuss your questions and concerns regarding a power of attorney and estate planning to make sure that you choose what is best for you and your loved ones.