Author: Tom O’Rourke, Counsel
The purpose of any estate plan is to allow you to manage your assets while you are alive and to distribute these assets in accordance with your wishes following your death. This plan should also provide a mechanism for managing your assets in the event of your disability. This mechanism is a power of attorney.
A power of attorney allows one person to act on behalf of another. A person who executes a Power of Attorney names an agent to act on his/her behalf. The agent must be at least eighteen years of age and have the ability to know and understand what they are doing. Quite typically, the agent is a family member or close friend, but this is not required. Your agent may be any legally responsible adult. An agent only has the power to do what the power of attorney authorizes. It is essential that the person named as your agent be somebody in whom you have complete confidence to carry out your wishes.
A general power of attorney grants very broad authority to do anything the person granting the power can do. A limited power of attorney authorizes an agent to undertake specific acts such as sell a car or sign a loan application, or the power applies only for a limited period of time.
A comprehensive estate plan typically includes both financial and health care powers of attorney. A financial power of attorney authorizes your agent to manage your finances. An advance directive (also commonly referred to as a health care power of attorney) typically includes an expression of your wishes in the event you are terminally ill and in a vegetative state, designates an agent to make medical decisions on your behalf, and authorizes your agent to discuss your condition with health care providers and have access to your medical records.
An agent’s power to act on your behalf may become effective as soon as the power is signed, or it can become effective only upon the occurrence of a specific event such as a determination that the person granting the power is incapacitated. The person granting the power determines when the agent’s authority commences.
It is advisable to seek the assistance of an estate planning attorney to assist you in developing powers of attorney that are tailored to address your specific concerns.
If you do not wish to consult an attorney, there are a number of alternative choices you can use to help you develop a legally effective financial or medical power of attorney. For example, some states (i.e. Maryland and California) have adopted statutory form financial powers of attorney that you may simply print out and have signed and witnessed in accordance with the requirements of state law. These statutory forms can be found by doing a Google search for “statutory financial power of attorney – your state name” Similarly, the Five Wishes Directive is an advance medical directive that is valid in most states. This directive may be obtained by doing a Google search for “Five Wishes Directive” and the website will tell you if it is valid in your state.
While it is always preferable to have your attorney draft any powers of attorney you may need, a form downloaded from the internet will state your wishes and can be relied on in the event of disability.
Powers of attorney are essential for all individuals. They may be needed regardless of your wealth (or lack of wealth). The only alternative if you become incapacitated and do not have a power of attorney is to seek court approval to appoint an agent to act on your behalf.
Tom O’Rourke began his legal career with the Internal Revenue Service, where he served in the Office of Chief Counsel for a period of 10 years and has been in private law practice since 1983. Mr. O’Rourke has been with NITP since 1989.
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