Do I Need a Power of Attorney?
One of my clients was 76 years old with a chronic health condition. She had been advised by numerous people to create a Power of Attorney (POA) but was not sure what that meant. She was worried that she wouldn’t be able to make decisions for herself if she created a Power of Attorney. I assured her she was making the right decision by appointing her oldest daughter, whom she trusted, as her Attorney-In-Fact. We worked together to create a trust for her home, her stocks and a small rental property. I prepared a will for her also. Then I put together her package of Powers of Attorney.
Below are some common questions related to creating a Power of Attorney that helped her make her decisions about creating one:
What is a Power of Attorney?
A Power of Attorney authorizes someone else to act on your behalf in a legal or business matter. There are a few different types of Power of Attorney:
1. General Power of Attorney: authorizes your chosen individual to act on your behalf in a variety of situations.
2. Special Power of Attorney: authorizes your chosen individual to act on your behalf in specific circumstances only.
3. Health Care Power of Attorney: authorizes your chosen individual to make health care decisions on your behalf if you are incapacitated.
4. Durable Power of Attorney: the General, Special, and Health Care Powers of Attorney can all be made durable with certain text in the document. This means they will remain in effect even if you become mentally incompetent.
What can my chosen individual with Power of Attorney do?
1. General POA: the actions allowed under a General POA are very broad and can include:
- Handling banking transactions
- Entering safety deposit boxes
- Buying and selling property
- Handling transactions of U.S. securities (stocks, bonds)
- Purchasing life insurance
- Settling claims
- Entering into contracts
- Filing tax returns
- Handling government benefits (Social Security, Disability, Unemployment)
- Taking out a loan
Additionally, you can grant other powers including:
- Taking care of business interests
- Employing professional assistance
- Making gifts
- Making transfers to trusts
2. Special POA: you can authorize someone to do a specific task for you with a Special POA. Instances in which people have utilized a Special POA include:
- Buying or selling a car
- Handling banking transactions
- Collecting debts
- Borrowing money
- Handling government issues
3. Health Care Power of Attorney: the person who is your Health Care Power of Attorney can make health care decisions on your behalf if you are unconscious, mentally incompetent, or otherwise unable to make such decisions yourself. A Health Care Power allows you to appoint someone to make these decisions for you. A Living Will allows you to express your wishes related to life-sustaining procedures.
Even if you have created a Health Care Power of Attorney, you still have the authority to give directions to doctors and other medical staff. This type of POA only becomes effective when you are no longer able to give or withhold informed consent related to your health.
What is an “attorney-in-fact?”
Attorney-in-fact is the term used for the person you have chosen to give authority to by your Power of Attorney. This term does not mean the person is or has to be a lawyer.
1. You must be mentally competent at the time of signing for the Power of Attorney to be valid. To be considered mentally competent, you must understand the different powers you are granting to your attorney-in-fact and what it means to delegate this decision-making authority.
2. The Power of Attorney becomes valid as soon as you sign it. This means that your attorney-in-fact can immediately start making decisions and exercising the powers you have granted them.
For my elderly client, it was a welcome relief and gave her peace of mind. I was happy to help her out and I love to do that for all my clients. If you want peace of mind for yourself, call our office at (626) 385-6303 and schedule and appointment today. We’ll be happy to help you.