Power of attorney designations are some of the most common estate planning resources utilized by adults of all ages. Some people who don’t even have a will yet have drafted powers of attorney. The basic function of power of attorney designations involves giving someone the authority to conduct certain financial transactions and/or manage medical care on behalf of another person under very specific circumstances.
Typically, powers of attorney can only exercise their authority when the person who has named them experiences some kind of incapacitation, like a coma. They lose their authority when that individual dies or recovers. These are some of the most common reasons that people add powers of attorney to their estate plans.
1. They are unmarried adults
As soon as someone turns 18, their parents lose the authority to access their medical records and make choices about the care that they receive. Unless someone gets married, there may not be any other person with the authority to speak on their behalf and a medical emergency. Therefore, college students and new adults often draft powers of attorney specifically so there is someone to handle their medical affairs in an emergency.
2. They have a house or a business
When someone has any personal property with significant value, there are usually certain maintenance responsibilities attached to those assets. Real property requires mortgage payments or at least annual insurance and tax payments. Businesses require someone to manage the workers, put together a schedule and pay all of the operating expenses. Individuals with significant personal assets may want to create financial powers of attorney so that someone else can fulfill their responsibilities in an emergency.
3. They want to avoid a guardianship
As people grow older, they may just naturally experience cognitive decline or start to develop warning signs of conditions like Alzheimer’s disease at may lead to dementia. Those coping with debilitating health issues could potentially end up in court when family members, neighbors or caregivers ask for guardianship.
The designation of powers of attorney before someone experiences a lack of capacity can help to protect them from involuntary guardianship later in life. Adding powers of attorney to an estate plan can benefit adults of all ages as they navigate a variety of different personal and financial circumstances.