What is power of attorney?

Clients often ask me what is a power of attorney. They often have heard that they need a power of attorney, but don’t really understand why. A Power of attorney is a document used during a person’s lifetime which allows them to designate a trusted relative, friend or adviser as their agent. When you create a power of attorney you can choose whether or not to make it effective immediately or only upon your incapacity. You can also choose what powers your agent is given. A power of attorney is only effective during a person’s lifetime, it terminates automatically when someone dies. It is not the same thing as being named someone’s executor. An executor is the person named in someone’s will who is charged with administering a person’s estate once they have died. Client’s often spend a lot of time focused on what powers to provide their agent and while that is an important consideration, far more important is the selection of the agent. The person that you appoint as your agent should be someone that you trust without question. If you have doubts that the person you are considering as agent will act in your best interest, then you should seriously consider appointing someone else. So why do you need a power of attorney? The short answer is that you cannot predict what will happen in life. You may live your entire life, healthy and with all of your mental faculties. However, given the increase in lifespan, many people eventually need assistance with carrying out their affairs. You don’t want to be left with a situation where you are too ill or incapacitated and no one can legally act on your behalf without going to court to obtain guardianship. Wouldn’t you rather make that decision now while you can rather than have a court make it for you.