When you are physically or mentally incapacitated, you need someone to handle your affairs and make decisions for you. Many assume that their family members will automatically take over this role. However, without proper legal authorization, it may not be so straightforward.
A power of attorney lets you appoint someone to act in your capacity in such a likelihood. The person you select for this role, known as an agent or attorney-in-fact, will have the legal authority to act on your behalf.
There are several kinds of powers of attorney
You can specify what the agent can do within a power of attorney document, including when they can begin acting in the role and for how long.
For instance, you can have a health care power of attorney to make medical decisions and a financial power of attorney to handle money matters. With regard to estate planning for incapacitation, a durable power of attorney will give the agent authority to act as your agent when you can no longer make decisions on your own.
Your agent owes you a fiduciary duty
The person you name as your attorney-in-fact is legally obligated to handle your affairs in your best interests. A rogue agent may be held liable for mismanaging your finances or abusing the role. It is part of what makes these estate planning tools useful.
Ideally, your agent should be someone responsible who has your total trust and is capable of representing your interests. Since they will be acting on your behalf, you do not want someone who is rash or prone to making mistakes – because some things cannot be undone.
It helps to learn more about the options available when selecting the agent and how powers of attorney work can help you plan around unforeseen possibilities.