“Hi, I’m estate planning attorney Alex Robinson, and I’m here today to talk to you about powers of attorney. Powers of attorney are vital components of any estate plan. But what are they and how do they work? In a power of attorney, someone, usually called the Principal, names someone else, usually called the Agent, to act on behalf of the Principal in case the Principal becomes incapacitated.
There’s a power of attorney for decisions about a principal’s health, helpfully called the Healthcare Power of Attorney and a power of attorney for the principal’s financial decision making, called the General Durable Power of Attorney.
Powers of attorney list the powers the agent can use. These have grown longer and longer over the years, as financial institutions like banks have wanted more and more specific powers for more and more specific situations. So even though these documents are like 20 pages long, what they really mean is that the Agent can act on behalf of the Principal.
Powers of attorney can be Immediate, meaning they’re effective as soon as they’re signed. Or they can be Springing, meaning that the Agent only has power after the Principal has been incapacitated. As with any decision, there are pros and cons to both. So make sure you talk to your attorney to determine which fits best with your circumstances.
If you don’t have powers of attorney in place and you become incapacitated, it’s likely that a loved one will need to go to court to obtain either a Guardianship or Conservatorship, or both, in order to be able to make decisions for you. This can take anywhere from 4 to 8 weeks and costs anywhere from $1500 to $2000. And if your loved one is already dealing with someone who’s incapacitated, that can really be a huge additional burden for them to bear.
So even if you don’t think you’re in a place to get a will or a trust set up, you definitely need a power of attorney. But we want to know what you think. Comment below with any questions you have about powers of attorney or issues that you’ve run into with not having those set up.
That’s all the time we have for today. I’m Alex Robinson with Retirement Help. Research. Rethink. Retire.”
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