What to Know about Power of Attorney
Power of Attorney (POA). An essential part of your end-of-life plan. This is the legal way to appoint someone to speak for you - both legally and financially - when you are not able to do so yourself. While we don't want to think about or admit it, the day will likely come when we can no longer make decisions for ourselves due to poor physical or mental health. A Power of Attorney specifically refers to decisions on legal and financial matters and can range from paying bills to overseeing investments, or even filing taxes.
How Long Does it Last?
When you die, the POA dies with you. The legal power he or she has over your estate is no longer in effect after death. There are three types of Power of Attorney:
Durable Power of Attorney: Once the legal paperwork is signed, this POA goes into effect and remains in effect until you change it. Perhaps you go through a phase where you are not deemed mentally competent, but then come out on the other side able to make decisions for yourself again. This type of POA remains in effect even if you are again able to make your own decisions. You can change your durable POA anytime.
Springing Power of Attorney: This type of POA doesn't take effect until there is some event that causes you to become mentally incompetent. The name is quite appropriate as it "springs" into effect after some event that leaves you unable to make your own decisions - like a serious illness or accident.
Non-Durable Power of Attorney: The final type of POA is not as common, but has its place. This type of POA is used when you need someone to take care of a specific legal or financial matter that you cannot attend to at that time. You may very well be mentally competent, but perhaps you are out of the country and cannot be there for the event, so you designate a non-durable POA to stand in for you.
Who should be my POA?
That's a pretty personal question, but let us share some thoughts on attributes that you might want them to have:
Highly attentive to detail - there will be a lot to manage so make sure they are comfortable digging into the weeds.
Reliability - choose a person, likely a family member, who you know you can rely on to make decisions when the time comes.
Awareness - make sure that your POA clearly understands the job that they are being assigned. It is not for everyone, so be sure that they are comfortable.
Financial literacy - ideally they are comfortable with personal (and potentially business) finances.
Collaborative - while they don't have to be a legal or finance professional, make sure that they can communicate well with others because they will need to give and take input from legal and financial professionals.
How to designate POA
There are plenty of online services and plenty of lawyers that handle these matters. By using Alfred to organize your end of life affairs, we can connect you with our network of recommended professionals to take care of the matter. You can start making a plan today!
You can likely find an online legal service for under $150. Using trust and estate attorney will run you more, but is a much more personalized approach.