Recently we have discussed differences between wills and trusts and how to protect your loved ones. Now let us discuss the person (agent) that you appoint with a Power of Attorney. This person will act on your behalf should you become disabled or incapacitated.

Just as it is crucial to put plans in place for when you pass, it is also crucial to put a plan in place should you become unable to make decisions for yourself or take care of financial obligations. There are three main roles of a Power of Attorney and more than a few types. Their roles are to make medical decisions on behalf of yourself (the principal), handling financial and legal matters and making decisions on behalf of someone who is no longer mentally capable of running their affairs. The agents can have extensive or limited authority to make legal decisions regarding your assets, finances, or healthcare.

Financial Powers of Attorneys:
• Limited power of attorney – Used for a specific purpose and time.
• General power of attorney – Gives your agent broad powers to act on your behalf. This includes financial transactions, signing documents, operating a small business (should you have one) and anything else you choose to have them handle. This remains in place until you pass, however, it can automatically end if you become incapacitated unless other provisions are stated.
• Durable power of attorney – this is the same as a general power of attorney but remains in effect if you become incapacitated. This does automatically end at your passing, so if you want the same agent to manage your financial affairs you should name that person as the executor of your will.
• Tax power of attorney – this is solely used for communications with the IRS. It is not used for ANY other matters.

Health Care Directives:
• Living Will – This will cover your specific desires about life-sustaining treatments. This should be very in depth and cover a variety of medical situations. This ranges from DNR to artificial life support to donation of organs. This are 100% YOUR wishes. No one is making any of these decisions on your behalf, these are predetermined by YOU.
• Health Care power of attorney – This is someone of your choosing that will make health care decisions on your behalf, should you not be able to do so yourself. This can be more flexible than a living will since we cannot predict every possible medical situation and your preferences for each situation. It is important to discuss your wishes and general desires with this person, as well as having complete trust that they will do what’s best for you and/or respect your wishes.
• Advance Directive – This is a living will and a health care power of attorney in one. So you’ll be able to indicate your health care preferences and appoint an agent to make additional decisions for you.

If you do not have a power of attorney in place, the court steps in. This is like intestacy – dying without a will. Just like that, the process can be draining costly and time consuming. The court will decide who will take care of your medical and financial decisions for you. You will have no say in who your agent will be. Normally the court will appoint a close family member but that might not always be best. They might not be responsible enough to handle such decisions or perhaps you do not want the same person handling both affairs (financial and medical). And lastly, maybe your closest relative is the last person you would want to make these decisions for you.

So, just like having a will or a trust, having a power of attorney will again make sure that your wishes are known, respected, and taken care of by someone you trust. This is just as important for you as it is for your loved ones, so they do not have to go through a lengthy and costly court process. An Estate Attorney can assist you with these matters as well.

Please feel free to reach out if you have any questions. You can contact the Estate Planning and Probate experts at Signature Legal at 586-630-3050 or email us at info@signaturelegalmi.com.