When you are not in a mental or physical condition to make decisions surrounding your health or finances, you need someone to do it for you. It could be a relative or a friend you trust to make the right calls.
Making some of these decisions, such as those surrounding a key medical procedure is sometimes a matter of life and death, and the individual you choose needs to be legally recognized.
A durable power of attorney (POA) lets you give legal authority to someone to act on your behalf. POAs can be given for health care or financial matters, and you can name one person to hold your POA for both or different people for each POA.
How necessary is it to have a POA?
It is important to set up a durable power of attorney regardless of your age. Anything can happen, and you may be left incapacitated.
Having a designated person to act on your behalf is crucial for anyone making plans for their future and is a way to make sure their wishes are followed when they can’t communicate for themselves. While we focus most on long term incapacity, a Power of Attorney is effective even if only needed for a short term incapacity. For many people having someone be able to handle finances in the event of even a short term incapacity is very beneficial.
Can the agent do as they please?
Even if you have chosen someone to act on your behalf, they cannot do as they please. While the agent may control your finances or health decisions, they are bound by law to keep your wishes in mind.
A durable power of attorney document specifies the scope of their powers. In addition, they owe you a fiduciary duty in that they need to act in your best interests at all times and maintain records of any financial actions. Legal action may be taken against them if they take advantage of their position.
It is advisable to learn more about how powers of attorney work when making your estate plans to avoid a situation where there are gray areas as to who should step in for you.