Power of Attorney
Life is unpredictable and sometimes situations arise in which we may no longer have the ability to make certain decisions about our medical treatment or our property. If you are in a coma, in surgery due to a serious accident, or in urgent care due to Covid-19 and are unable to communicate, who makes decisions about your treatment? How are your regular bills, like your mortgage, insurance, or utilities, getting paid? In an emergency situation like this you need someone who understands your wishes and who has the authority to make decisions for you or to act on your behalf.
A Power of Attorney is a legal document that lets you appoint one or more people to make specific types of decisions on your behalf in the event that you are unable to make those decisions. You control the terms of the Power of Attorney and define the specific events that would trigger authorization to act under the Power of Attorney. You also control the types of decisions that your appointed person (known as an attorney-in-fact or agent) can make.
There are two types of Powers of Attorney: A Financial Power of Attorney (FPA), also referred as a Power of Attorney for Property, and a Health Care Power of Attorney (HCPA), also referred to as a Medical Power of Attorney.
The FPA authorizes your chosen agent to make certain financial decisions or take certain actions on your behalf. This may include making payments from your bank account to pay your bills, managing your investments, or selling your property. You control the level of authority your agent has over your property and you can put into place specific limitations that will prevent your agent from taking certain types of actions.
A HCPA authorizes your agent to make certain decisions regarding your health care and medical treatment. This may include the types of treatment you receive, where you live during treatment, or whether you should receive life sustaining treatment. Like the FPA, you can limit the authority of your agent and you can provide specific instructions for what to do in specific situations. For example, you can instruct your agent not to provide life sustaining treatment under certain circumstances, or that you do not want an organ transplant.
Everyone needs a Health Care Power of Attorney and everyone who owns property and who has financial obligations needs a Financial Power of Attorney. For many people, it is important to control what happens to their body or their property, even if they can’t communicate their wishes at the time. A HCPA allows you to make your medical wishes known and maintain control over what happens to you. A FPA allows you to stay in good financial standing with your creditors and helps to protect your property by ensuring that someone will be able to use your accounts to continue paying your bills or make important financial decisions for you.
No estate plan is complete without both of these vital documents.
If you do not have a Power of Attorney, a costly and time-consuming court application may be needed to appoint someone to make decisions for you. In the meantime, your loved ones may be unable to make decisions about your medical and financial needs. They may not be able to access funds to pay for your care or maintain your home or other property.
Additionally, not having clear instructions about your medical care could result in family fighting or it could place the burden of making very difficult medical decisions on a family member causing unnecessary distress and guilt.
Having a Power of Attorney will significantly reduce the emotional toll on your loved ones and provide them with the ability to make important decisions on your behalf.
Your agent is the person you authorize to make decisions for you. As a result, you should put serious thought into choosing your agent. Here are a few guidelines you should consider when choosing your agent.
- Your agent needs to be someone who knows you well and who understands your wishes. In some instances, your agent will be stepping into your shoes and making decisions for you as if they were you, so they need to understand what you would do in that situation. At other times, they will be following your instructions to ensure that your wishes are carried out.
- Your agent MUST be someone you trust. This person will be handling your finances and property, or carrying out your medical wishes. You need to trust them not to abuse that authority or make decisions that benefit themselves over you.
- If you have complex retirement accounts, financial instruments, or business operations, your agent needs to have an understanding of these systems as well as your goals and objectives.
- Your agent needs to be someone you can count on to accept this important role when the time comes. An agent takes on a serious responsibility and even if you appoint a person to be your agent, they are not legally obligated to make decisions for you or handle your financial affairs. Make sure the person you choose is willing to take on this important responsibility.
The cost to create a Power of Attorney will vary depending on whether you do it yourself or hire an estate lawyer. If you do it yourself you can pay as little as $50 per document for resource materials or online software. Hiring an estate attorney could cost anywhere from $75 to $450 per document depending on the complexity of your estate.
WARNING: Some states require a standardized form. Even if you are using a standardize form, it is important that you fully understand the ramifications of your decisions. Because there are very real life and death consequences to a Power of Attorney, you should have a licensed attorney explain your document to you so you fully understand the implications of your choices.
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About the Founder
Jedediah McClure is an attorney, former business professor, successful entrepreneur, and award-winning author. He has built multi-million dollar companies in multiple industries, is an accomplished public speaker, and has received wide-spread praise for his ability to educate and inspire others. He has been featured on NBC’s Dateline, Investigation Discovery, the New York Times, and Bloomberg’s BusinessWeek.
Because he has actually owned and run multiple businesses with hundreds of employees and millions of dollars in assets, he knows how to help his clients protect themselves and their assets in ways that truly impact them and their companies.
Jedediah has devoted his life to helping small business owners create successful companies, build wealth, and make life better.
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These materials have been prepared by the Supernus Business & Law Center for informational purposes only and are not intended as legal advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship between the sender and receiver. Internet subscribers and online readers should not act upon this information without first seeking professional legal counsel.
Jedediah McClure, J.D. is a best-selling and award-winning author, business professor, investor, entrepreneur, and former business executive turned attorney. He has built multi-million dollar companies in multiple industries, is an accomplished public speaker, and has received wide-spread praise for his ability to educate and inspire others. He has been featured on NBC’s Dateline, Investigation Discovery, the New York Times, and Bloomberg BusinessWeek.
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