With a power of attorney, you can give someone else the legal ability to make decisions for you. For example, you are generally the only person who can make medical decisions, such as deciding what type of medical care you want or what type of treatment you will reject. However, if you use a medical power of attorney, you can choose an agent who is then authorized to make these decisions on your behalf.
The same applies to many financial and legal decisions. Typically, only you can make withdrawals from your bank account, for instance, but a financial power of attorney can grant an agent the authority to do so.
When does it go into effect?
A common concern about creating a power of attorney is the fear of relinquishing rights. If you name an agent, does that immediately mean someone else has control over your healthcare decisions or access to your financial accounts? Even though this is a valuable estate planning document, you may be uneasy about granting such authority to a third party.
The solution is to use a springing power of attorney. This type of power of attorney only goes into effect when specific conditions are met.
The most common way to structure this is to tie it to incapacitation. If you suffer from a serious medical event or documented cognitive decline and are no longer able to make your own decisions, only then does the agent assume the power to act on your behalf.
This allows you to draft a power of attorney to offer future protections without immediately surrendering your rights. Be sure to explore all the legal tools at your disposal and understand how to integrate them into your estate plan effectively.