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What is the role of powers of attorney in an estate plan?

On Behalf of | Oct 19, 2023 | Estate Planning

Some estate plans are quite simple. An individual creates a will and no other documents. Some others may have a trust because they have financial concerns or complicated family circumstances. What people sometimes fail to consider is that a will does not have any legal authority until someone dies. An emergency that could cost someone their life could just as easily believe them incapacitated in a hospital.

People may want to add powers of attorney to their estate plans to protect against risks like car crashes and other personal emergencies. Power of attorney documents allow someone to name a specific person that they trust to serve as their attorney-in-fact or agent.

What does a power of attorney designation do?

Sometimes, the main goal of the power of attorney paperwork is to arrange for someone to manage financial resources in an emergency. Other people put together medical powers of attorney so that someone can manage their health care. These documents have authority when someone experiences incapacitation. They lose authority when the incapacitation ends or an individual dies.

Provided that someone creates a power of attorney with language that makes it durable, they could even use their power of attorney to effectively choose their own guardian in case they experience permanent incapacitation. That move can significantly reduce the chances of someone seeking a guardianship or conservatorship if their health declines.

Who should consider drafting powers of attorney?

In theory, anyone who is 18 years of age and unmarried would likely benefit from choosing someone to manage their affairs in an emergency. Their parents will not have the authority to do so without special documentation. A spouse is often the only person who can speak (automatically) on behalf of an incapacitated adult, so those who remain unmarried or get divorced may find powers of attorney particularly useful. Individuals with highly-specific medical preferences or sizable assets that could be at risk during an extended period of incapacitation, including small business owners, may also want to draft powers of attorney.

Understanding why people add powers of attorney to an estate plan might help someone determine whether they need such documents for their protection in the event of a potential future emergency. Seeking legal guidance can help those who need these documents to draft them efficiently and effectively.