Real estate, business, finance, and family—there are many aspects of a person’s life that require important decisions to be made on a regular basis. Perhaps your rental property needs immediate maintenance or the tenant will start complaining. Or, maybe someone made an offer to buy your business, but the price seems too low and you want to start negotiations. Did the taxes get filed yet? Oh, and don’t forget, your child’s tuition is due soon!
Life is full of problems that need to be solved, but sometimes things get in the way when it comes time to make a decision on an important matter. Some things you can plan for, like a vacation or business trip, and some things you can’t, like an unexpected medical emergency that leaves you incapacitated (i.e. mentally or physically disabled). So, who can you turn to when you’re unable to manage your own affairs?
A Power of Attorney is a document that allows you to appoint a personal representative (called an agent or attorney-in-fact) to make important decisions for you when you’re unable to make them yourself. In this post, learn how a Power of Attorney can be an important asset for situations involving diseases or serious diagnosis, dangerous work environments, and extended travels.
The Powers of an Attorney-in-Fact
First, let’s establish some basic facts about a Power of Attorney (POA). When you create a POA, you grant legal authority to an attorney-in-fact to make short-term or long-term decisions for you in your absence.
There are a few different ways in which you can grant power to your attorney-in-fact:
- General authority allows your representative to make any kind of decision, including issues of finance, legality, property, and more (although, power is limited to the areas a POA can address).
- Specific authority allows your representative to make decisions only where you’ve expressly granted power (for instance, you may only need their help managing real estate).
- An Ordinary Power of Attorney grants your attorney-in-fact power for as long as you are mentally competent; the authority ends if you become incapacitated, on a predetermined date, or when a specific event takes place (e.g. “This POA will end upon the birth of my first child”).
- A Durable Power of Attorney grants your attorney-in-fact power until you revoke their authority or pass away. So, even if you become incapacitated, your representative will still have the authority to act on your behalf. That being said, the POA must be granted before you become incapacitated to be valid.
Basically, a POA allows your personal representative to make certain official and legal decisions in your name. From signing legal documents to accessing your bank accounts, your attorney-in-fact acts on your behalf. As such, it’s important to choose a representative you can trust and to store your POA in a place that’s easily accessible in times of need.
Now, let’s explore some examples of appropriate times to use a POA.
Use a POA to Prepare for Incapacitation Caused by Disease or Diagnosis
Perhaps one of the most common reasons for creating a POA is to prepare for how your affairs will be managed when you are afflicted by a serious medical condition that can leave you incapacitated.
For instance, you should strongly consider making a Durable Power of Attorney when you are diagnosed with an illness that affects your ability to communicate, concentrate, or make reasonable decisions. Dementia or Alzheimer’s disease are prime examples of such a condition. According to the American Alzheimer’s Association, one in three seniors in the United States dies with Alzheimer’s or another degree of dementia.
So, it’s a good idea to prepare for degenerative diseases by expressing your wishes to your appointed representative while you are still of sound mind. You may wish to grant general authority to your attorney-in-fact so that all aspects of your estate are covered. Alternatively, you could choose multiple representatives who will work together to make decisions about a particular part of your finances or property. In either case, it helps to sit down with your representative(s) and discuss how you’d like them to execute their powers in relation to your best interests.
You may also wish to create a Medical Power of Attorney (also known as a Living Will or Health Care Directive) to address your personal health care wishes in the event you are incapacitated. This is important because a normal POA does not allow an attorney-in-fact to make medical decisions on your behalf. With a Medical POA, you can give your personal representative instructions regarding life-sustaining treatments, artificially provided nourishment, permanent unconsciousness, and more.
Use a POA When You Work in A Dangerous Environment
Your chances of incapacitation can increase if you work in a high-risk environment (like in construction, resource mining, or product manufacturing industries), which makes a POA an invaluable document to have.
Accidents can happen despite employers who urge for extreme caution and enforce strict safety regulations. If you are mentally or physically incapacitated while at work, you might lack the understanding or presence to decide how to deal with the situation.
You can prepare for work-related accidents by creating a Springing Power of Attorney—which means your personal representative’s power is effective the moment you become incapacitated. Some examples of the powers you could grant your representative in this situation could include the ability to:
- Make a workers’ compensation claim on your behalf
- Direct funds to pay for your medical treatments
- Proceed with any litigation you might impose on your employer
However, it’s important to note that some jurisdictions do not allow Springing Powers of Attorney, so be sure to create a POA that is effective for when you need it and abides by your local laws.
Use a POA When You Travel for an Extended Time
A Power of Attorney can be advantageous to many people, especially parents or business owners, who have to travel frequently or for an extended period of time.
For instance, if you’re a parent who will be separated from your child because of a long trip, you may want to grant your child’s caregiver Power of Attorney so they can handle your banking transactions, government benefits, and family care on your behalf.
With these powers, your attorney-in-fact could access your bank account and make any expenditures for your family’s education, medical expenses, or general care. If you receive monthly child tax benefits, your representative could collect those benefits in your name. You could also use a Child Medical Consent to grant your child’s caregiver the power to authorize certain medical treatments if there is an emergency.
For business owners who travel frequently, a POA can help ensure your business continues to operate smoothly while you’re away. In this situation, you could grant your attorney-in-fact control over property maintenance, management of investments, banking and business operating transactions, and issues of claims or litigation.
As a result, your personal representative could effectively manage all aspects of your business in your name—from something as miniscule as hiring a cleaning service to maintain the building, to something as significant as dealing with issues of faulty product claims or even lawsuits.
Your Attorney-in-Fact Acts on Your Behalf
There are many instances in which a Power of Attorney can help guarantee your wishes are fulfilled despite your absence or incapacity. In some instances, like when you’re planning to travel, you can create your POA right before you know you’ll need it. But, for most other situations, it’s best to create your POA far in advance because you’ll never know exactly when it will be required; this is especially true for those at risk of serious health conditions or work-related accidents.
With a Power of Attorney, you can ensure the person appointed to manage your affairs is someone you know and trust, and who acts with your best interests at heart.