A will may not be sufficient to handle all situations, so other documents are added to your estate plan.
Everyone needs a power of attorney. However, it is important to know there are different kinds and you need to know which one is best for your circumstances, according to Wicked Local in “Investors, Plans & Money: Power of attorney,” It is also important to keep in mind that a power of attorney gives a person the legal right to make decision in certain areas of your life and that person does not have to be an attorney or a spouse.
Each type of power of attorney works to achieve a slightly different goal. As you work with your estate planning attorney on developing your overall estate plan, you will want to know which type you need and what your state’s requirements are. You will have to be of sound mind, with awareness of what you are signing, when the documents are prepared and signed.
Here’s a look at the basic powers of attorney:
A General Power of Attorney gives the named agent the broadest scope and authority to act and make decisions for another person. The document ideally lists the actions the person wishes them to take. This requires absolute trust, because it gives the agent complete control.
A Limited, Specific or Special Power of Attorney is a document that gives an agent the authority to act on your behalf in a very specific area of your life, task, or within a specified time frame. An example would be if you wanted someone to sell, maintain, or manage property for you.
The Springing Power of Attorney is “triggered” (hence the name) when, and only when, certain conditions are met. That might be a loss of mental capacity, for example. This document also must be very carefully defined, and proof of the condition being met may need to be presented.
A Healthcare Power of Attorney goes by different names depending upon the state. However, it is named, this is the legal document that gives the authority to make healthcare decisions, if the person is incapacitated through illness or accident. The person named as your healthcare agent should have a clear understanding of your wishes regarding extreme life-sustaining measures, as well as critical care.
There can be problems with powers of attorney. The person named to act as an agent must be entirely trustworthy and reliable. Other issues arise, if the documents are not prepared properly. This is why an experienced estate planning attorney is the best source. Here are some examples of what can go wrong:
- Details are lacking, so the document is declared invalid;
- The wrong type of power of attorney is created;
- The state requirements are not met;
- An agent is named who the attorney would immediately know is a bad choice; and/or
- A generic document does not contain the correct language.
An estate planning attorney can advise you on creating a plan that fits your unique circumstances.
Reference: Wicked Local (April 24, 2019) “Investors, Plans & Money: Power of attorney”