Understanding the Power of Attorney

In its various forms, a power of attorney is an essential tool when planning for possible incapacity or if you otherwise need a trusted agent to manage your affairs. This legal document can grant broad authority to one or more agent to transact business or in some cases make medical decisions on your behalf. To understand the powers and roles, knowing the terms used is important. The person who signs the document and grants power to another person is called the principal. The person who is given power to act for someone else is called the agent.

Different Types of Power of Attorney

An agent under a plain power of attorney and limited power of attorney usually may manage your affairs until you are legally considered incapacitated or incompetent. The word "limited" narrows an agent's authority to transact business to only a specific property or with an agent's limited access to funds. An agent acting under a durable power of attorney has powers that remain in effect even after incapacity until the principal revokes the document or upon that person's death. A springing durable power of attorney will not go into effect until a doctor certifies the principal as incapacitated, allowing you to keep control over your affairs until you are unable. A medical power of attorney is always durable and permits healthcare decisions on behalf of the principal. This latter document may also include sections similar to a living will, guiding the agent and doctors' medical decisions to the principal's wishes.

Every state has laws governing the creation and use of valid documents granting these powers. Like your will, a durable power of attorney requires drafting according to the law of the state you live in and some forethought of your selection of agents. In Texas, statutes provide explanations of all of the standard powers. Florida statutes, though, provide definition for only two powers -- banking and powers over inventing. Thus making sure that your power of attorney matches your state is important. Although many states will recognize out-of-state documents, your agent will likely have higher hurdles to leap to be able to act on your behalf.

Take note that if your spouse is your agent under your power of attorney, this may or may not end automatically on divorce. Although this is so in Texas, it is not in Florida. McCreary Law Office, though, drafts its Florida durable power of attorney documents to revoke the power on divorce.

What to Consider when Appointing Your Agent

Appointing an agent under your power of attorney is a personal decision. If you are considering adult children, think about whether they are trustworthy and mature in handling finances and medical decisions on your behalf. Some adult children move away or lose touch; biological relation does not automatically make someone a suitable candidate. You might also select a friend, but make sure you have back-ups when someone your same age becomes disabled themselves or pre-deceases you. Above all else, always make the decisions regarding your power of attorney selection while you are in good mental and physical health.

What Role Does Your Financial Power of Attorney Play?

An agent under your durable power of attorney can have the authority to perform some or all of these tasks:

• Pay everyday expenses for you and your family with your assets
• Maintain, pay taxes on, sell, buy, and mortgage real estate and other property
• Collect government benefits including Medicare, Social Security, disability, and more
• Invest your money in mutual funds, stocks, and bonds
• Transact with banks and other financial institutions
• Buy and sell annuities and insurance policies on your behalf
• File and pay your taxes
• Operate your small business
• Claim inheritance or other property to which you are entitled
• Transfer property to a trust you created
• Hire someone to represent you in court
• Manage your retirement accounts

There may be other actions necessary to perform; however, the above list constitutes significant duties. Your agent must act in your best interest, keeping accurate records and avoiding conflicts of interest.

What Role Does Your Medical Power of Attorney Play?

Your medical power of attorney (called a designation of health care surrogate in Florida) is one type of health care directive that assigns authority to someone to make medical decisions on your behalf. The agent you select must be trustworthy and mature in overseeing your medical care and healthcare decision-making. Your healthcare agent will coordinate with doctors and other healthcare providers, ensuring you receive the medical care you prefer. To make these preferences clear, you may choose to use the second type of healthcare directive known as a "living will" or "advance directive." In this document, you can make clear your healthcare preferences. It is essential you know what is needed in your state. In Texas, for example, your medical power of attorney must be in a particular format.

Choosing your agent well, appointing backup agents, and tailoring your documents to your needs and specifications can take away a lot of worry about your future care and well-being. Having valid power of attorney documents can usually avoid guardianship issues, which are time-consuming, expensive, and limit freedoms. Work with an estate planning attorney to understand how to put your plan in place.

Please contact McCreary Law Office or call the Jacksonville, FL office at 904-425-9046 or the Houston, TX office at 713-568-8600 if you would like to discuss these areas with Jana.