Power of Attorney
Power of Attorney grants authorization to a person to act on behalf of another. POA is most often used when establishing estate planning strategies, but is also used to empower a person to make healthcare decisions or to act on behalf of a person who is disabled or mentally ill.
Granting Power of Attorney rights is an important decision. Allowing a person to make decisions on your behalf, should you become unable to do so, requires careful examination. The elected individual should be financially responsible and emotionally and mentally stable.
There are different types of Power of Attorney forms. The type required depends on the overall needs of the person. Some people might require multiple people to serve as POA in different capacities.
For example, a Durable Power of Attorney is only effective while the person who authorizes it is still alive. The authorizing party is known as the Grantor. Grantors must be of sound mind when executing the Durable POA and the representative is allowed to make decisions regarding real estate sales, transfer of property, and other types of financial decisions such as signing checks to pay debts.
Durable Power of Attorney can be expanded to grant the designated agent authorization to make decisions up until the time of the Grantor's death by executing a "Power of Attorney with Durable Provisions."
Grantor's can also appoint a person to act on their behalf regarding healthcare decision. This type of POA is known as a "Health Care Power of Attorney." The person assigned to this position should be capable of making difficult decisions on behalf of the Grantor because POA grants them rights to end life support, or refuse or withdraw authorization to perform any kind of medical care or treatment.
Another type of health care power of attorney is the "Advance Health Care Directive," which is more commonly known as a Living Will. The advance directive may or may not be required. Much depends on the jurisdiction of where the Grantor resides.
A less common POA is that of "Springing Power of Attorney." SPOA grants authorization to the designated agent only when the Grantor becomes incapacitated through illness or injury.
Springing POA can create challenges for the designated agent if the form is not properly executed. Due to HIPPA guidelines, physicians are not allowed to divulge medical information unless the Power of Attorney document specifically grants permission to release medical records to the attorney-in-fact.
Individuals granted decision-making powers through Springing Power of Attorney must obtain court approval to act on behalf of the Grantor. Most often, evidence is provided by medical professionals to validate the Grantor is incapacitated and incapable of making decisions on their own.
Grantors are allowed to revoke permissions simply by telling the designated agent they can no longer act on their behalf. The exception to this rule is if the POA was established as irrevocable. To release individuals form Irrevocable Power of Attorney typically requires assistance from a probate attorney.
Grantors must provide "Form 2848 Power of Attorney and Declaration of Representative" to the IRS to grant permission to communicate with the attorney-in-fact about tax returns.
Power of Attorney is an essential part of estate planning. It's best to obtain legal counsel to ensure documents comply with state regulations. Establishing POA is not difficult or expensive, but great care must be given when granting authority to act as on your behalf.
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