Assigning powers of attorney is a critical step in the estate planning process. It provides vital protections and guidance during a tumultuous time, which can prevent legal and personal disputes, not to mention financial turmoil.
However, people can misunderstand what powers of attorney are and what they empower a person to do. To help readers better understand this element of estate planning, we will explain the various types of powers of attorney below.
Medical and financial POAs
Depending on your wishes, you could grant different parties different roles as POA.
For instance, you could name one person to take control of your medical decisions and care needs if you become unable to do so yourself. You could appoint another person (or people) to manage your financial affairs.
POAs based on duration and timing
You can authorize different POAs based on when you want them to go into effect and whether you want to terminate them at a specific time.
For instance:
- A non-durable POA terminates if you become incapacitated or upon completion of a specific transaction
- A durable POA continues even if a person becomes incapacitated and continues until the person dies
There are also different types of durable POAs. A springing POA is one that goes into effect when and only if a person becomes incapacitated. A standing POA goes into effect when it is signed.
The type you choose matters
Authorizing someone to make medical or financial decisions on your behalf is not a decision to make lightly. And the legal forms and language vary based on the type of POA you choose.
As such, consider carefully what type of POA you want.
If you do not assign powers of attorney as part of your estate plan, you could put your loved ones in a painful position. Not only will they need to decide who should fill these roles, but they may also have to navigate the court process to secure permission through a guardianship or conservatorship, which is costly and time consuming. And this will have to happen during a time that is likely already upsetting and stressful.
To protect yourself and your family, take some time to consider POAs and get the necessary documentation in place.