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general power of attorney documents

WHY HAVING A POWER OF ATTORNEY IS IMPORTANT

The Elder and Disability Law Firm, APC Aug. 13, 2021

Picture this: you’re sitting down to plan for the future and you understand the role of wills and trusts when it comes to passing on your assets to your heirs, but what about the subject of appointing a family member or trusted friend as your power of attorney? Do you really want to — or need to — give someone else power over your financial decisions and control of your assets?

The answer often depends on a lot of factors, including your age, health, individual circumstances, and most of all, the type of power of attorney you are considering. Powers of attorney can be broad, limited and focused, contingent on circumstances, or durable — meaning in perpetual effect no matter what happens.

If you live in Southern California, including the areas of Redlands, Riverside, Palm Springs, or Rancho Cucamonga, bring your estate planning questions and concerns to The Elder & Disability Law Firm, APC. The estate planning attorneys at The Elder & Disability Law Firm can discuss your circumstances with you and advise you of your needs, including any powers of attorney you might need as part of your estate plan.

WHAT IS A POWER OF ATTORNEY?

A power of attorney (POA) is a legal document that awards certain powers to another person — called the agent or attorney-in-fact. The person assigning those powers is called the principal. Some of the powers you can assign someone else to do on your behalf include:

  • Managing your bank account, including deposits, withdrawals, and other transactions

  • Paying your bills

  • Trading your stocks and bonds

  • Buying or selling property

  • Hiring people to take care of you

  • Filing your tax returns

  • Distributing your retirement benefits

  • Negotiating and signing contracts

  • Applying for Social Security or Medi-Cal benefits

  • Making medical decisions for you

Your power of attorney can cover some or all of these tasks and, if necessary, can be limited by duration — for instance, while you’re out of the country on vacation. Regardless of the scope that you provide your power of attorney, the agent is forbidden by law from making gifts to themself and is required to only act on your behalf in ways you specify.

TYPES OF POWERS OF ATTORNEY

In California, there are essentially four different types of powers of attorney that one can establish. These include the following:

GENERAL POWER OF ATTORNEY

This type grants your agent the same authority as you have to make decisions on your behalf. The agent can buy and sell property, access your bank account, pay bills, basically do everything you do or once did for yourself. A general power of attorney, however, expires once you, the principal, become incapacitated. For that contingency, you’ll need a durable power of attorney.

LIMITED POWER OF ATTORNEY

This document provides for specific tasks that the agent is empowered to do, such as managing an apartment complex you own, or just accessing your bank account to pay your bills. You can specify a starting and ending date for this type of POA if you like. As with a general POA, the limited POA expires when you become incapacitated unless otherwise indicated.

DURABLE POWER OF ATTORNEY

Both the general and limited POA can stay in effect even if you, the principal, become incapacitated, provided that the proper language is included. To make a POA durable, you should include the wording, “This power of attorney shall remain effective upon the incapacity of the principal,” or words to that effect. 

Alternately, if you would like the POA to become active only if you’re incapacitated, you can specify so: “This power of attorney shall become effective only upon the incapacity of the principal.” This clause makes the general or limited POA a “springing” power of attorney. It springs into action only when the principal specifies.

MEDICAL POWER OF ATTORNEY

Also known as an advance directive, a medical POA designates someone to make life-or-death medical decisions for you, should you ever end up incapacitated in a hospital. Do you want to be resuscitated, put on life-support mechanisms, or donate organs? Your POA can specify all of these choices and more.

Remember, any power of attorney must either be notarized or signed by two witnesses other than the principal to be effective.

SHOULD YOU HAVE A POWER OF ATTORNEY?

The simplest answer is that it’s always good to have contingencies in place, including a power of attorney assigned to a trusted family member or friend so that they can make decisions for you, should you ever become incapable of making those decisions yourself. Giving someone a POA also can help avoid the process of the court appointing a conservator, should you ever become incapacitated.

If your assets are jointly shared by your spouse, a POA may not be necessary except for healthcare decisions. In that case, however, the two of you should consider the contingency of both becoming incapacitated in one accident.

Though California law protects you against any abuse by the agent you name, you still must choose wisely in appointing an agent. You can, if you choose, name more than one person as your agent, or name alternates in case the agent you name is unable or unwilling to assume the responsibility.

Rest assured that a POA can be canceled or amended at any time so long as the principal is of “sound mind” when making the decision to cancel or amend duties.

HOW THE ELDER & DISABILITY LAW FIRM CAN HELP

Having a will or trust in place will take care of the distribution of your assets upon your passing, but who is going to make decisions for you if you’re suddenly incapable of doing so? Ultimately, that’s the purpose of establishing a power of attorney.

Depending on your situation, there may be alternatives to a POA, especially if your assets are held jointly, but a medical POA is always a good option to consider. You don’t want your family members arguing over your treatment while you lie in a hospital bed unable to speak for yourself.

Powers of attorney are an essential part of estate planning. The experienced attorneys at The Elder & Disability Law Firm, APC will meet with you, discuss your unique needs and circumstances, and help you come up with the optimal package of estate planning tools to protect you and preserve your assets — while taking care of your family and loved ones when you’re gone.

If you live in the Redlands, Riverside, Palm Springs, or Rancho Cucamonga, California, contact The Elder & Disability Law Firm, APC today for a comprehensive estate planning evaluation. With the right guidance, you can begin planning for your future today!