An illness or injury can leave you incapacitated and unable to manage your affairs. In such a situation, you need someone to step in your shoes and make decisions on your behalf. A power of attorney can help you achieve that.
A power of attorney (POA) is a legal document that allows you to designate a person or entity to act on your behalf. It is a crucial aspect of estate planning, given that you don’t know what the future holds.
How a power of attorney works
As mentioned, a POA is about giving legal authority to a third party to act on your behalf. The person or entity you appoint is known as an agent, and they can make crucial decisions for you, including financial, legal and health care decisions.
You can define the agent’s scope of authority regarding the decisions they can make for you and specify when they can begin acting in your place. It is also worth pointing out that the agent owes you a fiduciary duty of care. This means they must act in your best interests and follow your wishes per your instructions.
Getting started with a POA
The first thing you need to do is identify the best type(s) of POA for your situation. There are different types of POA, and it is crucial to make the right choices. Next, you need to identify the agent(s). Anyone given POA should be responsible, trustworthy and capable of handling the duties you assign them.
The last step is developing the document and following the legal process that makes it legally binding. Given the importance of a POA, it helps to have informed legal guidance at all stages to avoid making mistakes that could harm your interests.