Powers of attorney are important legal documents that serve as an essential part of estate plans. Unlike a revocable living trust or last will and testament where you provide for your family members after you pass, your power of attorney forms let your family care for you after you are mentally unable to make decisions. Specifically, you, the principal, will give your agent power to act on your behalf and in your best interests.
If you are over 18 and of sound mind, you are legally able to prepare power of attorney documents. Here are the steps you should take in order to put these documents in place.
Decide Which Type of Power of Attorney You Need
In Arizona, there are three types of power of attorney documents you can sign.
A financial durable power of attorney, sometimes known as a general power of attorney or durable power of attorney, will give your agent the authority to handle all financial transactions on your behalf. These transactions can include:
- Paying your bills, including your utilities, rent, or mortgage
- Depositing or withdrawing funds from your bank accounts
- Making purchases or contracts on your behalf, such as buying necessities or hiring a roofer to fix damage to your home
- Speaking with your retirement or pension plan provider on your behalf
- Taking out loans in your name
- Dealing with real estate, including selling your home or buying property in your name
A durable healthcare power of attorney will give your agent the ability to make healthcare decisions on your behalf, including:
- Giving or withholding consent to medical tests and surgical procedures
- Speaking with your doctors
- Accessing your medical records
- Taking you off of life support, in accordance with your wishes in your medical living will.
Finally, a durable mental health power of attorney will allow your agent to place you in an inpatient psychiatric care facility, rather than go through the steps of obtaining court-appointed guardianship.
You can also decide if you want the power of attorney to go into effect immediately, or if you only want it to “spring” into effect when you become incapacitated. You can also decide if the power of attorney should only be in effect for a short period of time, or if you want it to be in effect indefinitely. For example, someone undergoing routine surgery may prepare a healthcare power of attorney document that covers only the time period of the surgery. This lets their healthcare agent make decisions on their behalf while they are knocked out.
Select an Agent
Selecting the proper agent is perhaps the most important decision you will need to make when preparing your power of attorney forms.
Your agent, sometimes known as an attorney-in-fact, will have significant power over your finances or health care decisions. Because of this, you should ensure that your agent is not only trustworthy but also responsible.
Selecting an agent isn’t about loving one family member more than another. Instead, it’s about making an honest assessment of the relative strengths of your loved ones so that you will be protected in the long run.
For example, Rachel and Ross have two adult children, Monica and Joey. Monica is an accountant, while Joey is a struggling actor who spends every paycheck on frivolous toys. Although Rachel and Ross love both children equally, they select Monica as their financial agent because she has a history of being responsible with money.
When you select an agent, you should speak with that person so they understand their responsibilities, as well as your personal wishes. Your agent is duty-bound to make decisions that are in your best interests. Your financial agent, in particular, will have significant access to your financial affairs. Although they will have access to your bank account, they cannot treat it as if it is their own personal piggy bank. However, your financial agent is entitled, by law, to compensation for time spent serving in this role.
In your power of attorney documents, you have the ability to select both an agent and a backup agent. In the event that your first choice person is unable or unwilling to perform his or her duties, your backup agent will have to step up to the plate.
Prepare and Finalize the Forms
When you are ready to put together your powers of attorney, we will meet and go over the forms and discuss who you will name as your agents. I always prepare these forms in plan and simple, easy to follow English, without legalese. I will answer any questions that you or your agent have, not matter how small. I want you to be comfortable and confident in your decisions.
When you are satisfied with the document, you will sign the power of attorney document form in my office. I will be the witness and my notary/assistant will stamp the document. An important element of power of attorney documents is that they are revocable as long as you are of sound mind. This allows you to change your mind or adapt to unforeseeable scenarios.
In our example above, it may come to light that Monica was embezzling client funds and falsifying tax documents. As a result, Ross and Rachel decide to revise their power of attorney documents, no longer allowing Monica to have access to their financial accounts.
Don’t Wait Until It’s Too Late!
It’s never too early to sign a power of attorney document. Even if you are in the prime of your life, you could be hit by a bus tomorrow and be in a coma for weeks. While this may be statistically unlikely to occur, it’s better to be safe than sorry.
There is a time when it is too late to prepare these documents. If you become mentally incapacitated, you will lose the ability to sign your power of attorney documents. Receiving a diagnosis of dementia may prevent you from being able to assign power to your agent. Instead, your loved ones will have to go to court to become court-appointed guardians in order to make medical decisions on your behalf or have access to your bank account in order to pay your mortgage. This can be costly and time-consuming, especially in a family emergency.
Because power of attorney documents are revocable, you can make changes to them while you are still of sound mind, so there is little to risk in doing the paperwork now.
This article is for informational purposes only. It does not provide legal advice, nor does it create an attorney-client relationship. In order to schedule an appointment to discuss your last will or other estate planning documents, please contact me today.