A power of attorney ("POA") is a written document that authorizes another person, who is called your agent or attorney in fact, to perform acts on your behalf during your life. Death terminates a POA. A POA is a private arrangement that gives another person authority to make decisions for you. That authority can be as broad, narrow, general, or specific as you want it to be. In other words, you can authorize your attorney in fact to do many things for you, or you can limit the authority of your attorney in fact to only a few matters. Your POA can relate to only financial and property matters, or the POA can also contain personal care provisions. For example, a POA can give another person the authority to manage your business and investments, conduct banking transactions, employ advisors, buy and sell assets, file tax returns, deal with retirement plan benefits, nominate a guardian for you, and continue a program of gift giving, to name a few of the powers that you can give your attorney in fact.
Assuming that you do not need a POA if you are married is a common but dreadful estate planning mistake. If you are married, you do not automatically have legal authority to handle personal and financial matters for your spouse. A married person therefore needs a POA as much as a single person.
A POA that does not become ineffective if you become incapacitated is called a durable POA. The document must contain specific words to make it a durable POA. Thus, not all POA’s are durable POA’s.
You can design your POA so that your agent has authority to act upon your behalf (1) when you sign the POA, (2) only when your doctor decides that you are unable to make decisions for yourself, or (3) upon a certain date.
Because a POA is a private arrangement between you and another person, the probate court does not have to be involved. Thus, there are no accounts to file, no bond to post, and no ongoing attorney fees to pay. A general durable POA can be an inexpensive and easy way to avoid guardianship. Your estate plan would be incomplete without a general durable POA.