Many people are under the impression that estate planning is something only the wealthy can afford – yet they remain interested in preserving their legacy, continuing to support their loved ones, and passing on their assets according to their wishes when the time comes. The truth is that estate planning is more accessible than you likely realize, and having a costly estate planning attorney is not required. You’ve got this helpful guide, and you have TrustHandled! a well-respected company that offers solid online self-help solutions for common estate planning needs can help.
Power of attorney refers to the authority to make important decisions on behalf of someone else. As such, if you assign someone power of attorney, you authorize them to make certain decisions on your behalf in specific situations. A power of attorney (POA) itself is the legal document that authorizes the other person to act on your behalf, making you the principal and making them the agent or the attorney-in-fact. It’s important to note here that your attorney-in-fact need not be an attorney but can be anyone whom you completely trust to carry out this considerable responsibility.
There are two basic forms that powers of attorney take, including:
POAs go into effect when the principal is unable to make the necessary decisions on their own behalf. For financial POAs, this can mean signing documents on behalf of the principal when they are out of town or otherwise unavailable at the time. A power of attorney, however, can be as broad or as specific as the principal would like, but each delegated power must be clearly and specifically stated in the document. In other words, sweeping statements delegating all decision-making power to someone else will not prevail. Generally, powers of attorney must be notarized, but even in those states where notarization is not a requirement, it’s generally considered a good idea.
A general POA is designed to terminate upon the incapacitation of the principal, which means – if you are no longer able to make decisions on your own behalf – the POA will expire. A durable power of attorney, on the other hand, remains in effect in the event that you become incapacitated, which means that your agent will retain the authority necessary to make relevant financial decisions that are in keeping with your best interests – as defined in your POA – if you are incapable of doing so on your own behalf.
Medical POAs are designed to go into effect upon incapacitation, which means they are durable, to begin with. Finally, all POAs terminate upon the death of their principals.
If your financial POA is durable, it goes into effect upon it being executed by your signature and notarization – according to the requirements in your state. If your POA is general, it goes into effect in accordance with the specifications you include. There is also what is known as a springing POA, which is something of a hybrid between the two. Springing POAs spring into effect upon a predetermined event, which tends to be the principal’s incapacitation. It is important to recognize, however, that being required to prove someone’s incapacitation can be challenging and can complicate the process.
While you should always choose an agent – or attorney-in-fact – whom you trust completely, there is more to the authority you bestow upon them than simply your trust. Every agent has a fiduciary duty to the principal of the POA in question, which means they must act in the financial best interests of the principal. Because you’re relying upon someone else to make nuanced financial decisions on your behalf, choosing someone whom you not only trust implicitly but whose knowledge and skill align with this undertaking is paramount.
While your POA can afford your agent significant legal rights when it comes to managing your affairs, there are specific legal limitations in place that include the following:
At TrustHandled, we understand the anxiety that many people associate with estate planning. On the one hand, you know that the planning you do now represents your legacy and your ongoing commitment to your loved ones, but on the other, you may have no idea where to begin and may have serious concerns about the related expense.
TrustHandled implements a questionnaire-style process that allows you to create individualized and state-specific estate planning documents that afford you the peace of mind you’re looking for – at a fraction of the cost you would pay an estate planning attorney. Additionally, TrustHandled takes things one step further by storing your legal documents securely online – ensuring that they are safe from loss and destruction, are accessible when you need them, and are available for amendment at any time.