A power-of-attorney is an essential part of the estate plan information
What is a Power of Attorney?
A power of attorney (POA) in common law systems is an authorization to act on someone else's behalf in a legal or business matter. The person authorizing the other to act is the principal or grantor (of the power), and the one authorized to act is the agent or attorney-in-fact. Think carefully about who you entrust with your power of attorney, for you are granting them power over some, or all of your affairs, depending on the terms of the POA. The term attorney-in-fact should not be confused with the term "attorney-at-law", which is a lawyer. However, a lawyer can serve as an attorney-in-fact.
The Attorney-in-fact is authorized by the POA to act for their principal. Their powers may be limited or broad, depending upon the terms and scope of the POA. For example, a limited POA may authorize the agent to transact the sale of an automobile. The law requires an attorney-in-fact to be completely honest with and loyal to the principal in their dealings.
How do I create a Power of Attorney? Fortunately, it is now easier than ever to develop your own legally valid power of attorney document, quickly and economically.
Online legal document preparation
services and specialty software are readily available and very affordable. These tools can produce a valid power of attorney within an hour. In the event that you have a more complex situation and feel you need to consult an attorney and/or tax adviser to prepare a more customized plan for your situation this initial plan can serve as the basis of a more detailed plan. If you have not prepared a power of attorney, I urge you to consider preparing one soon.
Types of POA A power-of-attorney may be "special" and limited to one specified act or type of act, or it may be general, and whatever it defines as its scope is what a court will enforce as being its scope. (It may also be limited as to term it remains in effect.) Under common law a power-of-attorney becomes ineffective if its grantor dies or becomes "incapacitated," meaning unable to grant such a power, because of physical injury or mental illness.
However, a durable power-of-attorney remains in effect in the event the grantor is incapacitated. This is the reason a durable power-of-attorney is used as a "Health Care Power of Attorney" in conjunction with a living will, empowering the attorney-in-fact to make health-care decisions for the grantor, up to and including terminating care and "pulling the plug" on life-support machines keeping a terminally ill patient alive. A durable POA can also be used for financial affairs, and will survive the incapacity of the grantor. This can be necessary for elderly beneficiaries, for example.
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