Sometimes I am asked what planning documents are most important, and people are often surprised when I first mention the need for powers of attorney.
A Power of Attorney (POA) is a legal document that appoints a person to act as your “agent” in your absence or when you are unable to act for yourself. Depending upon how the document is drafted your agent can be authorized to make financial and health care decisions for you.
Married couples frequently believe their spouse will be able to handle everything on their behalf should a need arise. This is simply not the case. For example, if a married couple owns property together, and one of them is mentally or physically incapacitated, without a proper POA the other spouse would need to be appointed as a guardian for the incapacitated spouse in order to sell the property. This would likewise apply to investment and retirement accounts and other types of property.
Another area where a lack of a Power of Attorney can create problems is in healthcare decision making. Do not make the mistake of believing you have the right to make health decisions for your parent or spouse if they are unable to do so. A Durable Power of Attorney should be in place to deal with these situations or you could end up in court seeking a guardianship order so you can take care of a loved one.
Court proceedings can be quite costly in that they involve court filing fees, attorney fees, physician’s fees, and other costs. These can be avoided with some simple planning. When my wife’s mother suffered a stroke we were able to administer her affairs because we had planned in advance. We never had to go to court, and my wife took care of all her mother’s financial and medical needs without ever having to obtain court permission.
Moreover, do not be fooled by a “one size fits all” power of attorney. POAs need to be drafted with your specific needs in mind, so do not trust your needs to something that can be pulled off the web. It could be a very costly mistake.
Editors Note: This article was submitted by William H. Moller. Bill is an attorney with The Moller Law Group, LLC and may be reached at 719-687-2328 or by email at firstname.lastname@example.org.