A power of attorney is a document that gives someone the authority to act on your behalf in the event that you cannot make decisions for yourself. A general power of attorney is not to be confused with a health care agent who is charged with making health care decisions for someone in the event they are incapacitated. These two functions are totally different but the same person can have both responsibilities.
So when is a good time to execute a power of attorney? Well, now. While most of us take life for granted, you never know when you will need someone to act on your behalf and it isn’t always in the event that you become mentally or physically ill. If you are in the military or if you have to go overseas for a long period of time for work, you will need someone to manage your affairs. Also, if you are married and you have accounts in your name only, you will want your spouse to have access to them in case of an emergency so naming your spouse as power of attorney is an excellent precautionary measure. Chanel Reynolds, a Seattle woman, lost her husband unexpectedly in a biking accident and had no clue how to access their checking accounts and other critical financial information. The lack of a power of attorney cost Ms. Reynolds peace of mind and money when she needed them most.
Your power of attorney (also known as “attorney in fact”) can do things for you like write checks, open and close bank accounts in your name, buy and sell real estate, exchange stocks and the list goes on. Thus, you should be very careful in whom you select to have this authority. It does not have to be a relative. After consulting an attorney who is well-versed in estate planning, you should think through who you want to act as your power of attorney, what powers you want them to have and select a successor who can act in their stead in the event they are unable. Two things to think about as you decide to execute a power of attorney are when you want the power to take effect and for how long you want the power to remain in effect.
A springing power of attorney becomes effective when some event happens like incapacitation or disability (it “springs” into action upon the occurrence of some event). However, the document can be drafted to take effect upon its signing and remain in effect after the incapacitation of the testator. I advise my clients to have a durable power of attorney that remains in effect post-disability for the sake of continuity in managing their affairs.
If you have a question or would like a free phone consultation, please feel free to contact me at firstname.lastname@example.org or by phone at (202) 507-6313.