Why Now Is the Right Time to Review Your Powers of Attorney

By Mitch Cory | Related Practice: Estate Planning & Administration

As we head into fall, it is a good time to look at your powers of attorney. As a refresher, a power of attorney (POA) is a document where you, the Principal, appoint an Agent to act on your behalf with the powers contained in the POA. A POA, especially when written to be durable through your incapacity, is a powerful planning tool to avoids your family having to go through a guardianship/conservatorship proceeding through the court if you are incapacitated.

A POA is either effective immediately or upon the Principal’s incapacity (also called a springing POA). Immediately effective means that the agent may act upon the signature. A springing POA means that the agent may only act after confirming that the Principal is incapacitated. Confirming incapacity is a process usually included in the POA itself, and is often done with a letter written by the Principal’s treating physician or two letters from medical professionals who have examined the Principal. The springing POA thus has a protective barrier before the Agent can act on the Principal’s behalf. On the other side, however, an Agent is often called to act in a stressful situation, and getting letters from a physician may be difficult. The key is that you trust your Agent with the authority contained in the POA, and you and your Agent understand when your POA is effective. A POA may also be “durable,” i.e. a Durable Power of Attorney. Durable means that the POA will continue to be effective even if the Principal is incapacitated.

Often, you will have two durable POAs, one appointing a financial agent and another appointing a health care agent. This is because you may appoint different agents, and because each document contains different provisions. When you think of your Agent and successor Agent, consider who would be available and capable in the event of your future incapacity. As always, you should choose someone you trust since the Agent has considerable authority to act on your behalf. Particularly for the financial POA, your agent may have a number of extraordinary powers that can assist your agent with your end-of-life planning. Understanding the powers of your Agent is important for you and your family, to either limit or allow your Agent to make financial decisions for you in the event of incapacity.

If you have not updated your Powers of Attorney recently, or if you’re unsure whether your documents reflect your current wishes, now is the perfect time to revisit them with your advisor. The Stokes Lawrence Estate Planning team is here to help you review and update your documents so you can move forward with confidence.