Most people associate estate planning with older adults or those facing serious illness. But a power of attorney is a document that every adult can benefit from, regardless of age or health. Without one, a sudden accident or medical emergency can leave your family without the legal authority to act on your behalf when it matters most.
What Is a Power of Attorney?
A power of attorney is a legal document that grants another person, called the agent or attorney-in-fact, the authority to make decisions on your behalf. The person granting this authority is called the principal. Depending on how the document is written, the agent may be authorized to handle financial matters, healthcare decisions, or both.
The Two Main Types
A financial power of attorney allows your agent to manage bank accounts, pay bills, file taxes, handle investments, and conduct real estate transactions on your behalf. This is particularly useful if you become incapacitated or are simply unavailable to handle financial matters yourself.
A healthcare power of attorney, sometimes called a healthcare proxy, designates someone to make medical decisions on your behalf if you are unable to communicate your wishes. This document works alongside a living will to ensure your healthcare preferences are followed.
What Makes It Durable?
A standard power of attorney becomes invalid if the principal becomes mentally incapacitated. A durable power of attorney, by contrast, remains in effect even if the principal loses capacity. For most estate planning purposes, a durable power of attorney is the recommended option, since the situations where you are most likely to need it are the same ones that may affect your capacity.
Choosing the Right Agent
Selecting an agent is one of the most important decisions in this process. The person you choose should be trustworthy, organized, and capable of making clear decisions under pressure. It does not have to be a family member. Some people choose a close friend or a professional. What matters most is that the person understands your values and will act in your best interest.
What Happens Without One?
If you become incapacitated without a power of attorney in place, a court may need to appoint a guardian or conservator to manage your affairs. This process, called guardianship or conservatorship, is time-consuming, expensive, and removes your family’s ability to act quickly. It also means a judge, rather than someone you trust, makes decisions about who manages your life.
BestFarewell’s Roundtable, their Family Management System, gives families a secure place to store power of attorney documents alongside wills, healthcare directives, and other essential records so they are accessible when they are needed most.