Estate planning is often associated with wills and trusts, but one of the most critical—and sometimes overlooked—documents in any comprehensive plan is the power of attorney. A power of attorney can provide someone you trust with the ability to act on your behalf if you are unable to make decisions for yourself, whether temporarily or permanently. It can provide continuity and protection, allowing your affairs to be managed smoothly even in difficult circumstances.

Without a power of attorney in place, loved ones may be forced to seek court approval to handle financial or medical matters. This is a process that can be time-consuming, stressful, and expensive. Establishing a power of attorney can help avoid uncertainty during a crisis and ensure that your preferences are respected. An estate planning attorney can assist in preparing this document as part of a broader estate plan, ensuring that it aligns with state law requirements and reflects your wishes.

What Can a Power of Attorney Do?

A power of attorney (or “POA”) is a document that grants another person—known as an “agent” or “attorney-in-fact”—the authority to act on your behalf. The powers granted can be broad or limited, depending on your needs and preferences. A POA may allow an agent to handle a wide range of responsibilities, including:

• Paying bills, managing investments, filing taxes, or handling banking transactions
• Buying, selling, or maintaining real estate and other assets
• Approving treatments or accessing medical records
• Signing documents or dealing with insurance and benefits

The specific powers granted in a power of attorney will depend on how the document is written. Some people choose to give their agent broad authority, while others may restrict decisions to certain tasks or time periods. The flexibility of a POA makes it a versatile estate planning tool that can be tailored to meet specific circumstances.

Financial vs. Medical Powers of Attorney

There are several types of power of attorney, but the two most common in estate planning are financial and medical (or health care) powers of attorney. Each serves a different purpose and may be activated under different circumstances.

A financial power of attorney authorizes an agent to make decisions related to money, property, and business interests. This might include managing bank accounts, paying bills, or overseeing investments. It may take effect immediately or only after incapacitation. Some people prefer a “durable” financial POA, which remains effective even after incapacity, ensuring continuous management of their assets.

A medical power of attorney (sometimes called a health care proxy or health care power of attorney) grants authority to make health-related decisions if you are unable to communicate or make choices for yourself. The agent may consult with doctors, consent to treatments, or make end-of-life decisions consistent with your known wishes.

By creating both types of POA, you can authorize someone to manage your financial affairs and make medical decisions in accordance with your values and preferences if you are unable to do so.

Planning for Incapacity With Power of Attorney

No one expects to lose the ability to make their own decisions, but incapacity can occur suddenly due to illness, accident, or aging. A power of attorney can offer a plan for these scenarios, reducing the risk of confusion and conflict among family members.

Without a POA, loved ones may need to have a guardian or conservator appointed by the court to handle your affairs. This process can be slow, costly, and emotionally taxing. A valid, up-to-date POA can help avoid this outcome by granting someone you trust the legal authority to step in immediately.

With a durable power of attorney—one that continues even after incapacity—your chosen agent will be able to make financial and medical decisions without court intervention. A POA may help to maintain stability by allowing bills to be paid on time and medical care to be provided promptly, and your agent can manage your affairs according to your wishes.

Who Can I Choose as an Agent for Power of Attorney?

This person you choose to serve as your agent will have significant authority over your affairs. Some key qualities that might be considered when selecting an agent include:

• Trustworthiness: The agent will be required to act in your best interest and respect your wishes.
• Responsibility: Handling financial or medical matters may require organization and good judgment.
• Proximity and availability: Someone who lives nearby or is easily reachable may be able to respond quickly in emergencies.
• Understanding of your values: An agent who is familiar with your priorities can make decisions aligned with your beliefs.

Some people may name a close family member as their agent, while others may choose a trusted friend or professional advisor. It is also possible to name alternate or co-agents to ensure that decisions can be made even if one person is unavailable.

Using a Living Will With a Power of Attorney

A living will is another key document that can complement a medical power of attorney. While a POA designates someone to make health care decisions on your behalf, a living will provides written instructions about the type of medical care you prefer to receive if you become terminally ill or comatose.

By combining a living will with a health care power of attorney, you can provide guidance while giving your agent the authority to make decisions for you. A living will outlines your wishes in specific situations involving end-of-life care, and a power of attorney can offer detailed instructions for your agent in other situations. Together, these documents may help prevent uncertainty and provide understanding about your preferences for medical professionals and family members.

An estate planning attorney can help ensure that these documents work together effectively and comply with state laws, which may vary regarding format, witnessing requirements, and terminology.

Can I Revoke a Power of Attorney?

A power of attorney is not necessarily permanent. As long as you remain mentally competent, you can revoke or change it at any time. Revocation must typically be made in writing and communicated to the agent and any relevant institutions, such as banks or medical providers.

Common reasons for revoking a POA include changes in relationships, relocation, or simply updating an estate plan. You may review your power of attorney periodically to confirm that your chosen agent and the powers granted still align with your needs.

If you become incapacitated, a durable power of attorney will continue to operate until your recovery or death. However, if the agent is unable or unwilling to serve, a successor agent can take over if one is named in the document.

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal advice. For personalized guidance and to ensure your estate plan meets all legal requirements, it is recommended that you consult with a qualified estate planning attorney.