We live in a world that can change at any moment. An illness, accident or other tragedy can happen to you at any time and, though we don’t want to dwell on these possibilities, we must be prepared for them. When most people hear ‘Power of Attorney’, they often think these are only for those with a large business or those with huge amounts of assets or money to protect. However, a Power of Attorney (or POA) is necessary for everyone, regardless of your career, lifestyle or bank account.
A Power of Attorney is a legal instrument that delegates an individual’s legal authority to another person. If an individual is incapacitated or mentally incompetent, the POA assigns a trusted party to make decisions on his or her behalf. These decisions can be of a medical nature (if life support should be terminated, for example), a family nature (who should make decisions for the children if the person cannot do so him or herself) or a monetary nature (who pays the bills or makes decisions for the business when the main decision maker is incapacitated).
There are different kinds of POA. The two main kinds are “springing power of attorney”, which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated. The second is the “durable power of attorney”, which is effective immediately and requires no proof that you are incapacitated to sign your name. An attorney can help you choose the type of POA that is best for your needs.
Many people confuse having an executor of their estate (which is stated in your will) with a POA and do not think they need both. The main difference is that the executor of your estate can only make decisions after you die. A POA, in contrast, can make decisions for you while you are still living but unable to make the decisions on your own. Imagine what would happen if you were in a coma for two months (or longer). Who would make financial decisions? What would happen to your business? If there was not another parent, who would make decisions for your children? Not only would your family, friends and business colleagues be faced with a mess, but you might also find that those who ended up making decisions for you were not making ones that were in your best interest.
A POA is obligated to make decisions that are best for you and your family/business and, because they are chosen by you, will be the person who is in the best position to do so. More than anything else, a POA provides peace of mind. Once you have one designated, you can stop worrying about how things would get taken care of in a worst-case scenario and instead enjoy your business, family and friends and live life to the fullest.