3 Things You Need to Know About Powers of Attorney

If you're thinking about planning your estate, it's important to understand what you're getting into. Not only do you need to consider creating a will and a trust, but you'll also want to consider designating a person to act as your power of attorney. Here's what you need to know about starting the process.

Estate planning can be a complicated process. You'll need to create a will that details your wishes for end-of-life care, the division of your assets, and your funeral preferences. You'll need to choose a guardian for any minor children who live with you. You may need to create a trust or even multiple trusts to disperse your assets. On top of all of this, you may want to create a power of attorney. Creating a POA enables you to designate an agent: someone who can act on your behalf to make legal decisions. A POA can be invaluable if you become incapacitated and are unable to make decisions for yourself; however, it may also be appropriate to create a POA if you plan to travel for an extended period of time and need someone to manage your affairs for you.

1. Your chosen agent doesn't need to be a lawyer.

When you meet with your attorney to create a power of attorney, you will be called the principal. The person you designate will be called the agent or the attorney-in-fact. Although the word "attorney" appears in this title, keep in mind that the person you select as your POA does not need to be an attorney or have any legal training. They will, however, have legal power, so it's important to choose someone you trust to make decisions for you.

2. You can have a deadline.

When you draft your power of attorney, you'll be able to choose a specific deadline at which the power of attorney will expire. You can choose a precise deadline, such as a specific month, day, and time. In other cases, you can file revocation paperwork that essentially cancels the power of attorney. If you file revocation work with your attorney, your lawyer will notify the agent and let them know the new date of expiration. After the date and time passes, the agent will no longer be able to make decisions on your behalf.

3. There are different types of powers of attorney.

When you create a power of attorney, you aren't necessarily signing over all of your rights and the person you designate can't automatically act in your name to make financial or legal choices. In fact, the type of power of attorney is very important and specifies exactly how the agent can act on your behalf. For example, with a limited power of attorney, the agent can do something very specific, such as sell or purchase a car for you. A general power of attorney is a bit more vague and enables the agent to more for you. Youmay also consider signing a durable power of attorney; however, this provides the most amount of power and enables someone to act for you even if you are incapacitated.

When you're ready to start planning your estate, call your attorney for assistance. They'll be able to answer your questions and help you create the documents you need to be prepared.