As you develop your estate plan, you’re going to hear and see a lot of new terms – some more than others. If you have experienced legal guidance, you don’t fully have to understand them all. However, it’s wise to know what some key terms mean.
One of these terms is “power of attorney,” or POA. People often misuse this term, thinking it refers to a person (such as “I’m making my oldest daughter my power of attorney.”) However, a POA is actually a document. You may have more than one in your estate plan
What does a POA document do?
A POA document is what you use to give a person the authority to make decisions on your behalf if you’re incapacitated. That person is generally referred to as the attorney-in-fact or agent. For example, you would use a POA document to give your health care agent the authority to make medical decisions on your behalf and determine what life-prolonging measures to continue based on the wishes you’ve stated in your health care directive if you can’t speak for yourself.
You can give the same person or a different one the authority to make financial decisions and transactions on your behalf with a financial POA document. You can designate specifically what they can and cannot do (for example, anything from paying your mortgage and other bills to selling your stocks and other assets if needed for your medical bills or long-term care).
What is a “springing” POA?
If you’re still relatively healthy mentally and physically when you develop your estate plan and you’re designating people to have POA authority, you’ll likely give them what’s called “springing” or sometimes “springing durable” POA. That means their authority doesn’t take effect until a specified event occurs – like being in a coma or otherwise being unable to express your wishes or handle your affairs.
As with anyone you task with a role in managing your affairs before or after you pass away, it’s crucial to talk with the person you choose (and any alternates) to be sure they’re willing and able to take on the job and are comfortable carrying out your wishes. With sound estate planning guidance, you can make the best decisions for yourself and your family and help prepare those whom you may need to count on someday.