Estate planning: What is a Power of Attorney?

On Behalf of | Dec 19, 2022 | Estate Planning |

You might think that your family will automatically manage your affairs and make financial or health decisions on your behalf when you become incapacitated. However, it is not the case. For instance, a bank won’t let your kin withdraw funds from your account without proper legal authorization.

It can be near impossible for your loved ones to act in your place without the legal authority to do so, and it is crucial to prepare for such a possibility. A power of attorney (POA) allows you to appoint someone to manage and represent your interests in the event of incapacitation.

How power of attorney works

As mentioned, you can formally appoint someone to act on your behalf and make decisions that affect you when you become incapacitated. This is done through a document known as power of attorney. The person you choose, known as the agent, will act on your behalf when you are unavailable due to incapacitation.

Depending on the powers you give your agent, they can manage your finances and make health decisions on your behalf when you cannot do so. For example, your agent can conduct financial transactions on your behalf and decide whether to continue with a medical procedure, among other things.

Understand how POA works

Almost everyone needs a POA, just in case the unexpected happens. However, only a few people have such plans in place. A POA can save your loved ones the trouble of going to court to get legal authority to handle your affairs and help protect your financial interests.

Therefore, it is advisable to understand how a power of attorney works, your legal rights, the responsibilities of the agents and the various types of POAs that can help you achieve your objectives.