At Colby&Thornes, our estate planning and estate administration attorneys can advise you as to whether and under what circumstances you might need a power of attorney, and we can prepare the necessary documents to be sure that your wishes are carried out.
What is a Power of Attorney?
A power of attorney is a document whereby one person grants authority to another person to act in his/her place and stead. The person who grants the power, and authorizes another person to act in his/her stead, is known as the principal. The person who is authorized to act under the terms of the document on behalf of the principal is called the agent, or the attorney-in-fact.
Subjects covered under a power of attorney could be wide-ranging. Most often, however, a power of attorney is used to address issues relating to finances and health issues.
Types of Powers of Attorney
Not all powers of attorney are the same. They differ not only on the subject matter they address, but also on the conditions under which the power becomes exercisable. Here are examples of various types of powers, and how they can be used:
General Powers vs. Durable Powers. A general power of attorney grants to the agent or attorney-in-fact complete authority to act on behalf of the principal immediately upon execution relating to all matters expressly set forth in the general power of attorney. The general power of attorney can grant broad powers or powers that are very limited, or anything in between. A general power of attorney expires if and when the principal becomes incapacitated. If the principal desires to have the power of attorney to survive the incapacity of the principal, then the power of attorney is call “durable”. A power of attorney can be general, durable, or both general and durable. The express language of the power of attorney controls.
Durable Health Care Powers. A durable health care power allows you to name a specific person to make decisions concerning your health care in the event you become incapacitated and are unable to make those decisions. The document should set forth your wishes and provide instructions to the agent concerning medical treatment.
Durable and General Financial Powers. A financial power of attorney allows you to designate an agent to handle financial matters on your behalf. This could involve anything from paying household bills, to buying or selling property, to collecting your Social Security benefits, to paying taxes, and so on. Whether the power of attorney is general, durable or both general and durable should be set forth in detail in the document. In some cases, it may make sense to make the power of attorney effective immediately (and therefore general). In other cases, it may make sense to make the power effective only in the event of the principal’s incapacity. In the latter case, it is referred to as a durable power of attorney that springs into use only after the occurrence of incapacity of the principal. The power of attorney can also define what constitutes “incapacity” thereby not requiring the agent or attorney-in-fact to look outside the power of attorney when determining the definition of what constitutes the “incapacity” of the principal.
Medical Records General Powers of Attorney. Medical records are closely guarded by health care providers, and federal law. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) specifically limits disclosure of those records and related information. But what happens if become ill, your agent or attorney-in-fact needs to make medical decisions regarding your treatment, and the agent cannot get access to your medical records? A general power of attorney for medical records designates your agent or attorney-in-fact with authority to access your medical records under HIPAA so that that agent can make better, more informed decisions regarding your medical care.
These are just some examples of the more common types of powers of attorney that may help in the planning and administration of your estate.
Deciding If a Power of Attorney is Right for You
Whether a power of attorney makes sense for you will depend upon multiple factors. As experienced Scottsdale estate planning lawyers, we find that the decision is best made in the context of a comprehensive estate plan addressing financial, health, and other issues. If you would like to explore the subject of how a power of attorney may help in planning your estate, contact Colby & Thornes to schedule an appointment.