What is a Power of Attorney and Why is it a Part of an Estate Plan?

What is a Power of Attorney and Why is it a Part of an Estate Plan?
By Brittany E. O’Brien and Heather Rooney McBride

When most people think of an estate plan they think of a will, but a true estate plan will likely include several other documents depending in order to appropriately encompass all of a person’s needs.  Estate planning is making a plan in advance regarding what you want to happen to your belongings, accounts, real estate and children if you were to become incapacitated or die.  People often do not think about what would happen if they were to suffer some kind of tragedy or illness that would leave them still alive, but incapacitated or unable to make their own decisions.
For just that type of possibility, an estate plan should include what is called a Power of Attorney (POA).  It is important to have both a medical and financial POA.  A medical POA sets out who you authorize to make medical decisions for you in the event that you are unable to make them for yourself.  A thorough medical POA will also include what, if any, life-prolonging procedures you are wanting should they be deemed needed (also called a living will or an advance directive), if you want to be an organ donor, and if you want to be buried or cremated.  Generally, medical POAs are not effective until a prescribed circumstance triggers the power; for example, two physicians certifying in writing that you are incapacitated and cannot make medical decisions for yourself.
A financial POA is drafted for the purpose of allowing another person or persons to sign legal documents for you, to pay bills, withdraw funds and deposit funds from or to your bank accounts, prepare and sign tax returns, or any other act necessary for your financial or business dealings.  A financial POA can either become effective only upon your incapacity, or it can be effective when you sign it.  Making a financial POA effective upon incapacity is the more common choice; however, reasons that you may want the financial POA to be effective immediately could include:  you are out of country for an extended period of time and want someone local to be able to handle your affairs, you own rental property and would like your spouse or agent to be able to sign contracts when you are unavailable, or you reside in one state and have an ongoing business in another and would like a local designated person to be able to sign documents for you.
POAs are used for more than just estate planning, but they are also an important piece of the estate planning puzzle. They are fairly simple to prepare and consequently are relatively inexpensive legal documents, but by having them in place, a tragic circumstance would become easier for your loved ones and would ensure your wishes are carried out.
If you or someone you know are in need of a Power of Attorney or any other estate planning documents, please contact Rooney McBride & Smith, LLC.