When planning for your future it’s important to create a Will for after you die, but what happens if you get seriously ill or injured while you’re still living? This is where a Power of Attorney comes in.
What is a Power of Attorney?
A Power of Attorney is a person chosen (referred to as an agent or attorney-in-fact) to carry out financial and legal responsibilities for someone (referred to as the principal) were they ever to become unable to because of an illness or injury. If your client spends time planning for the future of their finances, it’s important that they nominate a power of attorney so that their plans can be successfully carried out how they wish.
There are five main types of power of attorneys:
1. General Power of Attorney
A general power of attorney is one that can do almost anything the principal can do in regards to their legal and financial affairs. This power of attorney agreement ceases when the principal becomes incapacitated, passes away or revokes power.
2. Special or Limited Power of Attorney
A special or limited power of attorney has been granted authority over specific matters only, such as the ability to sell property or make other decisions regarding real estate transactions. Or your client may want to give the power of attorney access to their bank accounts, but not their investments.
3. Healthcare Power of Attorney
A healthcare power of attorney is one that is given power to make healthcare decisions for the principal in the event they are unable to. This power of attorney can help carry out your wishes in the event you no longer wish to receive care when under a coma or want to be an organ donor.
4. Durable Power of Attorney
A durable power of attorney is one that maintains its agreement even after the principal has become incompetent. General, Special and Healthcare can all be made “durable”. Because of this, it’s important to make sure your power of attorney is someone that you wholeheartedly trust to carry out your wishes.
5. Spring Durable Power of Attorney
A Spring Durable Power of Attorney is one that “springs” to life when a triggering event occurs, such as someone becoming incapacitated.
Why do my clients need a Power of Attorney?
Handling financial matters can be more difficult as your client’s age, and even more so if your client becomes seriously ill or injured. When planning for a client’s future, it’s important that their carefully crafted plans can be carried through even if something were to happen to them.
What happens if my clients don’t create a Power of Attorney?
If someone is deemed incapacitated but doesn’t have a power of attorney, a family member will have to go through the time-consuming and expensive probate court process. The probate court will then grant a guardian (for health decisions) and a conservator (for financial decisions) for your client. By having a power of attorney your client will be ensuring that their family doesn’t have to go through the stress of the probate process in the event you become incapacitated.
What can a Power of Attorney do?
Depending on the type of power of attorney they can:
- File and pay for taxes
- Run your small business
- Handle banking responsibilities such as signing checks and paying bills
- Sell property and make real estate decisions
- Manage investments including stocks
- Manage Social Security or Medicare benefits
- Hire someone to represent you in court
- Buy and sell insurance policies
How do I implement this with my clients?
Most people select their spouse, a relative, or a close friend to be their power of attorney, but you can name anyone you want. Start the conversation with your client regarding something preventing them from carrying their plans out and how they can legally set up a power of attorney with a legal professional.
How can a Power of Attorney impact the clients I serve?
Having a power of attorney will allow your client to live out their financial dreams, or the dreams they have for their loved ones, regardless if they become ill or injured and unable to carry out their wishes.