Why Are You Putting Off Signing a Power of Attorney?

A Power of Attorney is a document that allows you to name someone to make decisions on your behalf when you are unable to do so.

Power of Attorney in Estate Planning

A Power of Attorney is one of the most critical and misunderstood elements of a complete estate plan. You may have a will and even draw up a trust as part of your estate plan. But you may be neglecting it, like many others, and name someone to serve as your Power of Attorney at the last moment. This is a task that should not be taken lightly. Every power of Attorney (POA) has its own level of responsibilities and limitations. You have to decide which authority to grant and restrict. You can increase power to full or limit it to a sole transaction. A Power of Attorney should be prepared according to the required needs. 

Before creating a power of attorney document and naming someone as your agent, consider the following points:

Estate planning rules differ from state to state, so you have to discuss your needs and concerns with your state law attorney who knows the state’s laws. For example, if you are in the state of Illinois, you need to consult with an Illinois state lawyer.

• Types of Power of attorneys: There are two types of Power of Attorney. You should ultimately choose one of them that satisfies most of the concerns.
• Springing Power of Attorney: A springing Power of Attorney is active when you are incapacitated. When a Doctor or Court declares that you do not have the mental capacity to make legal or financial decisions, your agent takes over and manages all of the affairs. Springing power of Attorney appeals to most people and seems easy as you have all control until you are unfit, but it is hard to use in reality. The incapacitated declaration took time by courts and doctors that cause delays in the management of your affairs. You may name a specific doctor or any other physician or determine your competency in the mental state. There are many reasons for incapacitation, like illness, injury, accident, or old age. When any of these occur, and no one is named as Power of Attorney, the court decides who will act.

• A durable power of Attorney: A durable Power of Attorney becomes active right after you sign it. Most attorneys advise executing a durable Power of Attorney. As an added security, the Attorney may also retain the original power of Attorney until necessary. 

• Power of Attorney expire with you: At the time you die, your Power of Attorney expires too. It becomes ineffective. Now, your Will decides what happens to your assets. Your Will takes over, and power is transferred to the estate executor you named.

• Name an alternate. An alternate name should be present in case the assigned agent dies before you. 

• Level of power: The level of power defines the responsibilities and restrictions of your named agent. It should be clearly stated what your agent can do and what they can not. For example, Do you want your agent to be able to amend or change a revocable decision you took during your lifetime?

• Take time to name: The person you named as your POA will have access to all of the assets you have under your name, and those written in the document. You have to be very careful in choosing one. Cases have been seen where POA uses power for his own benefit instead of yours.

Getting over your fears

The fear that most of us have is not choosing the right person. You may have chosen someone but still have doubts that your assets may be misused. This fear is natural and cannot be removed entirely from the mind. The only option is to name someone with extreme care as your POA. In this way, you can avoid and reduce some of those fears.

The next step is to take measures so your agent cannot misuse your given power.

You can do the followings to avoid such fears:

1. You should not use generic online forms for POA appointment.
2. You should take your case to an Illinois’s attorney, who can help you in designing the specific POA document and your estate plan that fulfills your needs.
3. POA documents should be specific to goal-oriented only. You only want these areas to be managed solely.

Final Thoughts

No doubt, a Power of Attorney is a compelling document in your estate plan and is underrated most of the time. The agent you name will have access to all assets that fall under your name. Your given power can be misused for someone’s else benefits instead of yours. So, you should be extremely careful in naming the POA in which you are giving all of the controls. You also have to be cautious in choosing the right type of POA. You should also be concerned with using a licensed Attorney from your state, as each state’s rules differ from each other.

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