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3 times power of attorney documents can lose their authority

On Behalf of | Mar 11, 2024 | Powers Of Attorney |

A primary goal of estate planning is to have documents in place that protect an individual or their family members in the event of an emergency or tragedy. Many estate plans include powers of attorney. These crucial documents allow someone that a person trusts to handle their bills, make their medical decisions or manage their business.

The reason that people draft powers of attorney is to protect themselves from the possibility of guardianship and the devastation that could follow an incapacitation. People could fall behind on their bills or end up facing eviction from their homes if they do not have someone to manage their finances but when they experience a personal emergency.

Powers of attorney often take effect when someone becomes incapacitated and cannot speak to others regarding their wishes for their healthcare or their financial matters. Those documents may eventually lose their legal authority under a few circumstances.

When someone’s condition improves

Ideally, someone’s medical emergency may only last a few days or several weeks. Someone placed in a medical coma to allow their recovery from a severe illness eventually regains consciousness. Those with numerous other debilitating health issues can regain their testamentary capacity when their condition improves. When someone becomes capable of communicating with others, when they regain consciousness or when their cognitive ability improves, their powers of attorney are typically no longer necessary and therefore lose their legal power.

When someone becomes permanently incapacitated

Basic powers of attorney for financial or medical matters may not remain in effect for the rest of someone’s life. Even when someone’s condition does not improve, their powers of attorney may no longer serve their purpose. If the courts determine that someone has lost their testamentary capacity, their powers of attorney may no longer offer any significant protection. However, durable powers of attorney can continue to influence someone’s care or finances for as long as they remain incapacitated or until they die.

When the principal dies

The principal or party who chose to draft the powers of attorney grants their agent or attorney-in-fact authority when they cannot act on their own behalf. That authority ends when their life does. At that point, the personal representative of their estate becomes the party with the authority to settle financial matters and handle other key concerns.

Understanding the limits that apply to key estate planning documents may help people put together more effective estate plans.