A power of attorney is a legal document that allows someone, known as an agent, to act (legally) on another person’s behalf. The person creating the document is known as the principal. Yet, power of attorney authority varies greatly. It can be very limited, but it may also be broad, depending on how a particular document is structured.
Because creating a power of attorney for healthcare decisions and/or financial decisions is an important part of creating an estate plan, it’s critical that all adults understand a few things about what it entails to effectively execute a version of this document that meets their needs uniquely.
#1: Choose a trustworthy agent
The person named as the agent will be able to handle all tasks permitted by the designation, so they should be trustworthy. They also need to be organized and to understand that they must work solely in the principal’s best interests. They must ensure they follow the principal’s wishes, even if those wishes go against their own beliefs.
#2: Consider the authority given
Each power of attorney document contains specific authority for the agent. Financial power of attorney designations can include the ability to pay bills, manage financial accounts or take care of assets. Healthcare power of attorney designations can allow someone to make medical decisions for the principal.
#3: Review the designation
A power of attorney document isn’t a one-and-done event. Once the document is created, it should be reviewed periodically to ensure it still meets the principal’s needs and reflects their wishes.
Power of attorney documents are an important part of a comprehensive estate plan. Having an estate plan in place allows the creator to relay their wishes in a legally enforceable manner, so it’s best to work with a legal professional when getting started, given all that is at stake.
