A Power of Attorney (POA) is an integral part in an estate plan. POAs come in different types, from springing to durable, they can be limited or durable, and they may name different Agents for different purposes.
Who can get a POA? Capacity in a nutshell.
To consider entering into a POA, a person must be over age 18, not under the influence of drugs or alcohol and who is not suffering under any mental disease or defect. This means that a POA must be done before common issues like dementia, memory loss and diminished cognition arise. Once a cognitive or capacity diagnosis (e.g. Alzheimer’s or dementia) has been given, a POA can no longer be issued and loved ones must then pursue the more arduous process of guardianship litigation.
When is it valid?
A POA must be in writing, must be signed, witnessed (by disinterested individuals) and notarized. Both the person giving away the power (the "Principal") and the person accepting the power (the "Agent") must sign and notarize affidavits about taking on this responsibility.
A POA is valid once signed by the Principal but doesn't become active until signed by the Agent. From a planning perspective, a Principal can set up and execute a POA before it becomes a necessity and keep it in a safe place until it is needed. When it becomes necessary, the Agent can retrieve, activate and utilize it. With that process, the Principal can maintain present autonomy and security while being prepared for the curveballs life can throw.
What does it cover? Scope of a POA is broad.
For all intents and purposes, the breadth of a standard Durable POA essentially creates a clone of the Principal. That said, a POA can be as broad or as narrowly tailored as is necessary.
For reference, consider a POA you may sign for a title company with respect to a home or car loan vs. a POA that allows the Agent to open and close bank accounts and write/cash checks on the Principal's behalf, with or without notice to the Principal. A POA should always be carefully tailored to suit the situational needs of the Principal, to ensure its practical application accomplishes your goals, and protects your interests.
Are they all the same? Types of POAs matter.
Durable, Financial, Springing, Healthcare-- are all different types of POAs. The type that you need depends on your situation. Durable POAs are just that; they usually convey broad classes of authority and are appropriate for most situations. A Financial or Healthcare POA Will speak to just those areas respectively, with specifically identified powers for the Agent. A Springing POA is one that's only effective if something-specific occurs. This type is often used during deployments and sometimes alongside the occurrence of a diagnosis; such temporary (or continuing) lack of capacity or other medical condition.
Taking the time to talk to a skilled Estate attorney can help you to get your needs met and your wishes followed. Setting your expectations will empower you to make the best decisions for your family. Don't delay making the plans you can't get around.
Shabrei M. Parker is a Partner at Mincey Fitzpatrick Ross, LLC where she specializes in estate planning and administration. You can reach her online at: www.minceyfitzross.com/attorneys/shabrei-m-parker/