A Power of Attorney is a fairly common, legally-accepted, simple way to assign decision-making authority over your affairs if and when you are not able to do so.
What many people don’t know is that if you pass away, your Power of Attorney is null and void – so it’s not a substitute for, say, a trustee who can carry out matters on your behalf when you are gone. So as an Estate Planning tool, the Power of Attorney is limited.
There are some other limitations to a Power of Attorney. For example, in some real estate or title situations, a Power of Attorney document that is a year or two old may not be valid.
For the most part, though, a Power of Attorney is a convenient thing to have, even if simply to give someone the authority to handle a contract while you are out of the country.
There are different levels of a Power of Attorney:
- General Power of Attorney: for handling many different kinds of actions such as banking, contracts, tax returns, government benefits and the like.
- Special Power of Attorney: for specific tasks only as specified by you.
- Health Care Power of Attorney: for health care decisions on your behalf.
- Durable Power of Attorney: a document is put in place so that if you become mentally incompetent, an Agent who you trust can act on your behalf. The Durable Power of Attorney must have been executed prior to your incapacitation.
You can see that the Power of Attorney can be versatile, and it can be a tactic to use as you plan for the time when you may need assistance in day-to-day matters that require your signature.
But again a Power of Attorney is not a substitute for a more far-reaching or legally-sensitive Estate Planning tool such as a Living Trust.
In those cases – even for creating a Will – it’s highly recommended that you work with an attorney who is trained in Wills, Trusts and Estate Planning Matters. Laws change regularly and it’s always wise to rely on professional advice when it comes to legal matters.