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I have designated June as Estate Planning Month. Why? Two critical life events occur in June: weddings and graduations. Having a power of attorney is a critical document to have. This is the time to begin to take on some of the responsibilities of adulthood and to choose who you want to make a decision if you are too ill, injured or lacks the mental capacity to make them yourself.
There are three basic powers of attorney documents: financial, limited and health care. Anyone over the age of 18 should have powers of attorney. If you don’t, a conservator/guardian must be appointed in a court proceeding, and they will make decisions for you. If the conservator/guardian who is appointed does not know you or your family, they may make decisions that you would not have wanted. You might ask, why my 18 year old would need a financial power of attorney, they have no wealth. What if they were in a car accident that was not their fault? As their agent (known as an Attorney-in-Fact), you could step into their shoes to make sure the one at fault paid for the care your loved one needed.
Therefore, whether you’re heading to college, setting up house as a newlywed, or going off to your new job, Powers of Attorney should be one of the documents you complete. When is it too late? If you become incapacitated, you cannot sign a Power of Attorney. Then your family is faced with needing to pursue a conservatorship/guardianship and will not have the ability to make decisions on your behalf until that’s in place; that might takes months depending on the court’s docket.
You’ll want to name someone you trust implicitly and who is also going to be available to make decisions when time is an issue.
For a medical or healthcare power of attorney, it is a great help if the person lives nearby and knows you well. For a financial power of attorney, the person may not need to live nearby, but they must be trustworthy and financially competent.
Always have back-up agents, so if your primary agent is unavailable or declines to serve, you have someone who can step in on your behalf.
You should also work with an estate planning attorney to create the powers of attorney you need. You may want to assign select powers to an agent, like managing certain bank accounts but not the sale of your home, for instance. An estate planning attorney will be able to tailor the POA to your exact needs. They will also make sure to create a document that gives proper powers to the people you select. You want to ensure that you don’t create a POA that gives someone the ability to exploit you.
Any of the POAs you have created should be updated on a fairly regular basis. Over time, laws change, or your personal situation may change. Review the documents at least annually to be sure that the people you have selected are still the people you want taking care of matters for you.
Most important of all, don’t wait to have a POA created. It’s an essential part of your estate plan, along with your last will and testament.