A properly drafted and executed power of attorney is one of the most versatile estate planning tools available today. Through powers of attorney you can give someone else the authority to represent you and your interests, and make important decisions on your behalf.
But who needs a power of attorney? Do you only need one if you are old, a business owner, or are going on vacation? Does every estate plan need one or more of these documents?
If you are beginning the estate planning process and are not sure if you will have to include a power of attorney, here are four questions you’ll need to ask yourself.
Question 1. Do you have any financial responsibilities?
One of the more widely used types of powers of attorney is the financial power. Through a financial power of attorney you can allow an agent to manage your financial affairs. Depending on your circumstances, the power you grant your agent could be quite broad, especially if you have a lot of assets or financial responsibilities.
Should you one day become incapacitated, you will need someone who will be able to step in to manage your affairs on your behalf. A financial power of attorney allows you to select someone who will be capable of doing this. If you don’t have a power of attorney in place you risk not having someone who can take control when needed.
Question 2. Are you a parent?
A good power of attorney will allow you to ensure that someone will be able to care for your children in the event you are incapacitated, or even if you are just out of town for an extended period. Through a power of attorney you can, for example, give someone the ability to make medical decisions on your child’s behalf if you are overseas or otherwise unable to make the decisions yourself.
Question 3. Do you have medical wishes you want followed?
In the event of your incapacitation, do you know who will make medical decisions on your behalf? Do you have specific medical choices you want honored? If you don’t have a durable medical power of attorney in place, you will have no way of determining who will make medical decisions for you. Further, the person who gets to make decisions may not have any guidance about the types of health care you wish to accept or refuse.
Question 4. Are you an adult?
When it comes to estate planning and power of attorney, the basic equation is simple; every capable adult needs an estate plan that includes at least one power of attorney. These documents address important questions that only you can answer. Without them, you leave those questions unanswered.