When you hear the term “real estate planning,” what do you think of? If, like most people, you think about drafting a will or trust, with the intention of disposing of your property after your death. Many people are surprised to learn that estate planning is not just about who gets which property, and especially that some of the most important documents in your estate plan can go into effect before you die but not after: power of attorney.
What is a power of attorney? It’s a document by which you can grant another person authority to make decisions on your behalf if you are legally incapacitated. There are, broadly speaking, two types of power of attorney: health care power of attorney (also known as medical power of attorney or Patient Advocate Designation) and financial power of attorney.
It is uncomfortable to envision a scenario in which you are incapable of making important decisions for yourself. Of course, such a situation might never arise. But for many people, it does, and if you are one of those people, you will be very glad that you put a power of attorney in place. Here are three reasons why.
Legal Incapacity Can Happen Without Warning.
Often, legal incapacity is something that happens to older people who have developed Alzheimer’s disease or some other form of dementia. If you are young or middle-aged, you might think you’ve got decades before there is a risk of your becoming incapacitated. But while many people who are legally incapacitated are older, incapacity can and does happen to younger people, and it can have a disastrous outcome if there is not a power of attorney in place.
Young people can be severely injured in accidents or suffer sudden illnesses like stroke that result in serious brain injury. If that happened to you, who would make decisions on your behalf, both for your medical care and your finances? Even if you have a trusted person in mind, would they have the legal authority to do what you need them to do? Likely not.
A Power of Attorney Gives You Control.
When you create a power of attorney, you name an agent to act on your behalf. That allows you to choose someone you trust with your finances and, in the case of a health care power of attorney, with literal life and death decisions.
Planning ahead by executing a power of attorney also means that you have the time to talk with your chosen agent about your values, goals and wishes—or at least to put those things in a document to help guide him or her. You can also grant power as broadly or as narrowly as you see fit, giving your agent authority to handle all medical or financial matters on your behalf, or only certain ones. You also have the ability to revoke a power of attorney, or change whom you’ve designated as your agent, at any time while you are still legally capable of doing so.
A Power of Attorney Saves Time, Resources and Relationships.
What happens if you don’t have a power of attorney, but you become legally incapacitated? Someone will have to step in and make decisions on your behalf, usually through the process of seeking guardianship or conservatorship. That requires your loved ones to notice that you need help, a doctor to find that you are not able to manage your own affairs, and a court to appoint a guardian (to manage your personal decisions) and/or a conservator (to manage your finances). All of this takes time, during which you could suffer financial loss or injury as a result of your affairs not being managed properly.
There are also, of course, legal fees associated with pursuing a guardianship or conservatorship. And not to be ignored is the personal cost: the distress your loved ones (and you) may experience in the process of seeking control over your personal and financial affairs. You may feel that it is difficult to choose between your loved ones when appointing an agent, but by making that choice, you are doing them a service: relieving them of the burden of having to choose for you.
Typically, the court will appoint a close family member as guardian and/or conservator. But what if there are two or more family members seeing that role, especially if they disagree over what would be best for you? The issue of your care and protection could lead to serious family conflicts, perhaps a permanent rift.
There’s also the matter of whether the person the court would appoint to be responsible for your needs would be someone you yourself would have chosen (which is why it is ideal for you to have a say in this decision by creating a power of attorney).
If you don’t have powers of attorney in your estate plan, you need them. You always have more time to plan for the future, right up until the moment you don’t. If you have questions about powers of attorney, guardianship, or conservatorship, please contact our law office – Lynx Legal Service to schedule a consultation.
Please call us at 888-441-2355 email our intake and order form to us at [email protected]. One of our paralegals will be in touch ASAP.