What is the Power of Attorney?

Brought to

by - Geerdes & Associates

One of the most important legal documents in an estate plan is the Power of Attorneybut it’s also the legal documents most widely used to abuse the elderly. So, what is the Power of Attorney? A Power of Attorney is a legal document that grants someone the ability to make decisions on another person’s behalf, and it is an ability that only becomes active if the person granting the power, also known as the Grantor, is declared legally incompetent.

A General Power of Attorney does not give legal authority to someone else if you are incompetent. You have to have the right Power of Attorney to help you if you are incompetent.

There are different types of Power of Attorney. A Financial Power of Attorney allows a person, usually called the Agent, to make financial decisions for the Grantor. Depending on how the document is drafted, the Agent can do anything from filing taxes for the Grantor to selling his or her property. A Medical Power of Attorney, on the other hand, would allow the Agent to make medical decisions for the Grantor - so that means life support decisions, emergency procedures, and so forth. Someone with a Medical Power of Attorney may also be called a Health Care Agent.

What is the danger in giving someone a Power of Attorney? Some legal documents these days are offered by online services who generate a generic document to sign for a small fee - without telling you what powers you are granting your Agent. If you trust your Agent, then that’s fine. But abuse of power often occurs when one signs away his or her rights to use and protect one’s assets to a predatory Agent. This predator can be a lawyer, a friend, and sometimes even one’s own family. Thus, when making an estate plan, it’s important to sit down with an attorney who has your best interests in mind, and do your proper research so you know exactly what powers your Agent needs - and what powers they shouldn’t have and to ensure you and your assets are always protected.

Finally, many people try to avoid probate - the costly and lengthy process in which a deceased person’s assets are distributed by the court - by granting their heirs a Power of Attorney. However, what they don’t realize is that the Power of Attorney terminates once the Grantor passes away. The best way to avoid probate is by creating a trust, since not even a will can prevent your assets from having to go through probate. It’s always best to speak with an attorney who specializes in estate planning before making any final decisions, and it’s doubly important that you fully understand what you’re signing, so you don’t signaway your legacy, your rights, or lose your assets.