Power of attorney documents allow you to choose an individual—most often a family member or close friend—to make important decisions on your behalf. There are two power of attorney types to consider as part of your estate planning process: financial power of attorney and healthcare power of attorney.
Important Terms to Know
Financial power of attorney and healthcare power of attorney are often referred to in the more general sense as a durable power of attorney. The “durable” designation means that the power of attorney remains in effect despite your incapacity. An ordinary or general power of attorney would expire if you become mentally incapacitated.
If a durable power only comes into effect when the principal (person granting the power of attorney) becomes incapacitated, this is referred to as a springing power of attorney.
What a Power of Attorney Does
A financial power of attorney can give the person you select the authority to handle tasks such as:
- Paying your mortgage, rent, utilities, credit cards, and other bills
- Signing and depositing checks in your bank account
- Making decisions about your investments or a business you own
- Accessing your safe deposit box
- Applying for government benefits on your behalf, such as Medicaid for covering a nursing home stay
Someone who has a financial power of attorney is often called an agent or attorney-in-fact.
For healthcare, a power of attorney gives an individual the right to make medical decisions if you are too ill or injured to participate in your own treatment. You can outline your specific wishes in a living will, which the person you select will use as a guideline for overseeing your care. The person you give power of attorney to is often called your healthcare agent or healthcare proxy. The power of attorney and living will documents are also known as advanced directives.
Choosing the Right Power of Attorney
Often, people choose the same individual to have power of attorney for both financial and medical decisions. However, you are free to choose two different individuals if you believe that it is in your best interests.
In some cases, people grant the same powers of attorney to more than one person. For example, you may want to have your two adult children share in the responsibility. This can provide a valuable system of checks and balances, but it can also create delays when important documents need to be reviewed and signed by multiple individuals.
It is important to choose an alternate to step in if your first choice for power of attorney becomes unavailable due to illness, injury, or personal commitments. The only requirement is that the person or persons you select must be over 18 and considered legally competent.
Changing or Modifying a Power of Attorney
If you change your mind about who should have power of attorney over your affairs, you can revoke the document as long as you are still considered legally competent. To do so, you need to revoke the power of attorney in writing and notify any bank or financial institution dealing with the individual you had previously selected.
If other family members or friends believe the person you’ve selected is abusing their power of attorney, they can petition the court to have it removed. If the court finds there is sufficient evidence that the power of attorney is being abused, it will be revoked and a different person will be assigned the responsibility.
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At San Diego Legacy Law, we encourage clients to create a comprehensive estate plan that protects their interests regardless of what the future holds. Power of attorney designations are a standard part of the estate planning services we recommend.
Our firm serves clients throughout San Diego, as well as those in La Jolla, Del Mar, Rancho Santa Fe, El Cajon, Poway, Spring Valley, Chula Vista, Santa Rosa, Petaluma, Novato, and Healdsburg. Contact us today to schedule a consultation.