Read Time: 4 Min

Why Do You Need a Power of Attorney?

April 27, 2012

Durable Power of Attorney: A Durable Power of Attorney is a legal document in which you appoint an agent to assist you with handling your financial affairs and to make financial decisions on your behalf during your lifetime, either for convenience or in the event you become incompetent or disabled. A Durable Power of Attorney can help avoid the necessity of a costly and protracted guardianship proceeding. A Durable Power of Attorney remains in full effect throughout your lifetime and terminates only upon your death or revocation.

Why do you need a Power of Attorney? You are single, healthy, living the good life, or maybe you have a wife, children, a steady job that pays your bills, maybe you own your own home, and life is good. You take care of yourself, eat healthy, go to the doctor regularly and maybe even work out at the gym. You have heard about the need for estate planning, but have never gotten around to making that appointment with an attorney. Maybe you think that you do not need to do estate planning yet (you are too young for that!), or maybe you don’t want to pay the cost of having the documents prepared by an attorney, but then something happens . . . maybe you are in an automobile accident, or you suffer a stroke, anything unexpected . . . something that impacts on your ability to handle your day-to-day financial affairs, and you have not planned for this event . . . now what?

Many people assume that if they are married their spouse will be able to step in and take care of everything, but that simply is not true. If your spouse has ever tried to call and speak to a credit card company regarding an account in your name, they have been told that they do not have authority to discuss the account because it is not in their name, or the company will need to speak directly to the account holder for permission to speak with you. Now consider that you are unable to give your consent, because you are hospitalized from the auto accident or stroke, what will your spouse do now that you are unable to give your valid written consent? Now, in addition to dealing with the emotional impact of the situation, your loved ones will have to deal with an added burden of figuring out how to take care of the financial situation without having the proper document in place that gives them the legal authority to act on your behalf.

Let’s face it, no one knows what the future holds. If we are unprepared when an unexpected life-altering event occurs, we will feel the full effect of its blow. However, if we have thought about it, and are prepared, when something unexpected happens, the detrimental impact and devastating effects on our life can be reduced or eliminated altogether.

A document, such as a Power of Attorney (“POA”), can make a huge impact on your family member’s ability to deal with the situation. Having a POA in place provides a means for your family to handle your financial affairs without the need for a guardianship proceeding, which can be a time consuming and costly proceeding.

The POA is a powerful document that allows the individual you name as your agent (your spouse, adult children, a trusted family member, or whomever you choose) to step in and act on your behalf in all respects with regard to your finances when you are unable. This is a powerful document and is extremely important when life’s unforeseen circumstances impact your life. With a fully executed POA your agent will be able to do for you anything that you can do for yourself, i.e. pay your bills, file your taxes, continue your business interest, buy/sell real estate if necessary, enter into a caregiver agreement for you, talk to Social Security, Veteran’s Administration, Medicare, Medicaid, your agent can apply for Medicaid on your behalf or begin a lawsuit on your behalf, etc. This document will prove to be invaluable, and if you have not executed a POA prior to needing it, when/if something unforeseen happens to you, it may be too late — as you must have full mental capacity to sign a POA. If you fail to execute a POA, your loved ones will feel the devastating effect of your circumstances.

Life is full of uncertainties. How we plan for those uncertainties will make a big difference on the impact they have on our lives. Every person, married or single, of any age or stage of life, should have a validly executed Power of Attorney in place.