Power of Attorney Explained in 3 Minutes
Everything You Need To Know About Power of Attorney
Is there someone you trust to make decisions on your behalf if you suffer a tragic accident and cannot care for yourself? Jonathan Miller and Michael Mastroieni discuss the crucial topic of power of attorney and how it can benefit you and your loved ones. For more on long-term care planning, please contact Longevity Income Solutions today. We service the entire nation, with offices conveniently located in Philadelphia, Chicago, and South Florida.
What is a Power of Attorney?
A Power of Attorney is a document providing the legal authority for an individual to act on behalf of another person. In a nutshell, if you grant someone power of attorney, they will have the authority to make decisions on your behalf in the event that you cannot.
The person granting power of attorney is referred to as the “principal,” whereas the individual designated as power of attorney is the appointed “agent.” The relationship between the principal and agent is called a “fiduciary” relationship. This means that the agent is responsible for acting in good faith, prudence, and in the best interest of the individual they represent.
A power of attorney is only valid between two adults (by a person 18 years or older to another person 18 years or older). Also, the person granting power of attorney must have the mental capacity to do so, which means they cannot have dementia, Alzheimer’s disease, etc., when they sign the document.
Power of Attorney Example
To better explain the importance of power of attorney, we have outlined a common example encountered by families caring for an aging loved one.
Your elderly mother has just turned 90 years old and lives alone. She has ongoing home care and even attends an adult day care several days per week. The main risk is your mother lives alone at night, without supervision. Unfortunately, your worst nightmare becomes a reality when your mother slips going to the bathroom in the middle of the night and hits her head. Your mother falls into a coma and cannot make her own financial and medical decisions.
How will you pay her emergency room bill and ongoing care once she leaves the hospital? Your mother has assets but lacks savings in her bank account. Do you take a reverse mortgage on her home or perhaps sell her car to help pay for expenses? You and your siblings are left without guidance on who should make these decisions on her behalf, resulting in confusion and conflict. This is where a power of attorney proves its value!
Why You Need To Update Your Power Of Attorney Document Regularly
Even if you have already appointed a power of attorney in the past, it is important to revisit your POA documents every several years. That’s because every state makes nuanced adjustments to its legal documents. A power of attorney can be multifaceted, so you don’t want to be limited due to changes or legal updates.
Additionally, we all live busy lives, and it is common to forget the legal precautions arranged years ago. What if the power of attorney you assigned has passed away? Or, even worse, what if your power of attorney is someone you no longer have a relationship with? Don’t let your legal documents fall by the wayside and risk a costly mistake.
What Are The Different Types Of Power Of Attorney?
Non-Durable (Limited) Power Of Attorney
A Non-Durable power of attorney is temporary and expires when the individual becomes incapacitated or dies. A non-durable power of attorney is beneficial if you are not present to sign legal or financial documents. For example, if you live in a different state or country where business is being performed and require representation to act on your behalf. Non-durable power of attorney is temporary and can be revoked by the principal at any time. It also becomes void upon death, whereby the court will appoint a conservator to handle the principal’s personal and business affairs.
Durable Power Of Attorney
A Durable Power of Attorney (DPOA) is a document in which you appoint an agent to make decisions for you if you cannot. This person can be your spouse, child, parent, or any other trusted person you deem appropriate. A durable power attorney permits an agent to make decisions even if the principal becomes incapacitated, which is the main difference between a non-durable power of attorney.
The principal can assign numerous roles to a durable power of attorney. The most common responsibilities relate to financial and healthcare matters and can be broad or narrow in scope. You can also limit the time period for which the agent has authority.
Power Of Attorney (POA) Form
A power of attorney form is a document that grants someone else the right to make decisions on behalf of another person. This form is often used to give an agent the authority to manage the property and financial affairs of a person who cannot do so themselves.
A power of attorney form can be granted in two ways: by will or by writing. A will provides for the granting of power, but only after death. Writing grants power at any time, whether before or after death.
Who Can Override A Power Of Attorney?
The principal can change their power of attorney anytime, as long as they are mentally situated. In rare situations when the principal is deemed mentally unsuitable for changing their power of attorney, such as Alzheimer’s or dementia, the court can change the power of attorney. Also, because the fiduciary assumes the role of acting in the principal’s best interest, the court can override the power of attorney if this is in question. Such situations typically occur when a family member is attempting to take over assets of the incapacitated principal in a deceitful manner.
Longevity Income Solutions Can Help
We hope the above article and video help clarify the importance of having a power of attorney. Longevity Income Solutions is a national organization that compassionately designs, distributes, and facilitates financial solutions and resources for people burdened by the costs of their care needs. If you require long-term care planning, don’t hesitate to contact us today. We look forward to meeting you and your family!