Powers of Attorneys are essential tools for those looking to create an effective estate plan. A power of attorney allows a person to appoint another individual to act on their behalf in both financial and medical situations, in which they cannot act for themselves. The appointed individual, with guidance from the document, will be granted specific powers to act on. There are two major powers of attorney: a financial power of attorney and a healthcare power of attorney.
A financial power of attorney allows an individual, known as the principal, to name another person, known as an agent, to handle their financial affairs if they become unable to act for themselves. This can include daily banking tasks, ensuring bills are paid on time, or entering into contracts on the principals’ behalf. Typically, this document allows the agent to act on the principals’ behalf immediately upon the execution of the document. Having a financial power of attorney in place, prevents the need for a conservatorship in the event an individual becomes incapacitated and does not have someone in place to take care of their financial affairs while they are unable to. A conservatorship can be a lengthy and expensive court process and is completely avoided with the execution of a financial power of attorney.
A healthcare power of attorney is the other important power of attorney which allows a principal to name another person, known as a patient advocate, to act on their behalf in making medical decisions when they are unable to do so for themselves. The healthcare power of attorney differs from the financial power of attorney in that it does not become effective immediately, but rather once the principal is deemed incapacitated by two healthcare professionals.
It is important to have both of these documents in place as part of your estate plan to ensure that someone can quickly act during any time in which you need assistance caring for your finances or have a medical emergency in which you cannot make your own medical decisions.
Sharon A. Burgess and Danelle E. Harrington practice in the areas of probate/estate planning, long term care planning and elder law, and business and real estate transactions at SMITH BOVILL, P.C. Their articles are intended to introduce various issues arising within this field of practice and are not intended to replace individual legal advice. If you have questions, please contact Sharon or Danelle at one of the firm’s two convenient office locations in Frankenmuth and Saginaw.