The estate planning process involves several critical steps, including creating a last will and testament, establishing a living trust, designating guardianships, and preparing advanced healthcare directives. One important document that should be part of your plan is a power of attorney (POA)—a legal tool that authorizes a trusted individual to make decisions on your behalf. There are several types of POAs tailored to different needs, and understanding the distinctions between them is essential to protecting your legal, financial, and medical interests.
If you have questions about creating a POA or other estate planning documents, consult with an experienced estate planning attorney as early in the process as possible.
What Are the Legal Terms Used in a POA?
A POA document includes several legal terms that are helpful to understand:
- Agent: Also called the attorney-in-fact, this is the person chosen by the principal to act on their behalf.
- Principal: The person who creates and signs the power of attorney, granting authority to another individual.
- Durable POA: This type of POA remains in effect even if the principal becomes incapacitated.
- Limited (or Special) POA: Grants authority for a specific purpose or limited timeframe, such as signing a real estate contract while the principal is out of town.
Why Do I Need a POA?
There are many reasons to create a POA. It ensures that someone you trust can manage your affairs if you’re unable to do so. Reasons to consider having a POA include:
- Preparation for Health Emergencies: A healthcare power of attorney ensures that your medical treatment is managed according to your wishes if you’re incapacitated.
- Financial Continuity: A financial POA allows your agent to pay bills, file taxes, manage accounts, and sign legal documents if you cannot.
- Preventing Family Disputes: With a POA in place, you decide who has authority to act for you, minimizing potential conflict among family members.
- Avoiding a Court-Appointed Conservatorship: Without a POA, the court may appoint someone to make decisions for you. That person may not be someone you would choose.
- Ease and Affordability: A POA is often straightforward and cost-effective to create, especially with the assistance of a qualified attorney.
What Are the Different Types of POAs?
- General POA: Grants broad authority to the agent to handle financial and legal matters. This type is typically non-durable, meaning it ends if the principal becomes incapacitated.
- Durable POA: Takes effect immediately upon signing and remains in force even if the principal becomes incapacitated. It must include specific language to be durable.
- Medical POA: Also known as a healthcare power of attorney or healthcare proxy, this document authorizes the agent to make medical decisions on your behalf if you cannot do so yourself. This includes treatment preferences and end-of-life care decisions.
- Financial POA: Authorizes your agent to handle specific or broad financial matters, such as managing bank accounts, paying bills, or selling property.
- Childcare POA: Allows the agent to make temporary decisions about your child’s care, such as education and emergency medical treatment, if you are unavailable. The scope and duration of this authority vary by state.
- Springing POA: Only becomes effective upon the occurrence of a specific event, such as a physician’s certification of incapacity. This type often requires clear language and may involve additional steps for activation.
How Do I Choose an Agent?
Your chosen agent should be someone you trust completely, who understands your values and will follow your wishes. This could be a family member, close friend, or another responsible individual. They must be capable of making potentially sensitive financial or healthcare decisions and able to communicate effectively with other parties, including family and medical professionals.
Is it Possible to Override a POA?
Yes, a POA can be revoked or overridden under certain conditions:
- By the Principal: If you are mentally competent, you can revoke a POA at any time by notifying the agent in writing and destroying the original document.
- By the Court: A court may override a POA if the agent is not acting in the principal’s best interest, is abusing their authority, or is mismanaging the principal’s affairs.
- By a Legal Guardian or Conservator: If a court appoints a guardian or conservator due to the principal’s incapacity, that individual may have the authority to override the POA, depending on state law and the court’s ruling.
It is important to remember that a POA automatically ends at the principal’s death. At that point, control over the estate passes to the executor named in the will or to a court-appointed administrator.
Blue Ash Estate Lawyers at Wolterman Law Office Will Prepare a POA for You
If you have questions about any aspect of estate planning, including how to create a power of attorney that meets your specific needs, reach out to the experienced Blue Ash estate lawyers at Wolterman Law Office. We will walk you through each step of the process, help you understand your options, and ensure your documents are legally valid and aligned with your wishes. To schedule a free consultation, call us at 513-488-1135 or contact us online. With offices in Loveland and Blue Ash, Ohio, we proudly serve clients in Hamilton County, Fairfield, Norwood, and Forest Park, Ohio.