A power of attorney is often included in estate planning. It’s an extremely powerful document, and one that should be fully understood before executed. Here are a few things you should know before signing a power of attorney.
1 – You Can Make Them Limited
It’s a common misconception that a power of attorney gives someone the right to make decisions in all aspects of your life. In reality, they can and should be limited to very specific responsibilities. For example, you can have a power of attorney for financial affairs and another for health care. In most cases, you will have multiple different ones, each assigned to a different person in your life. This makes sense since someone who makes healthcare decisions on your behalf might not be the right person to also manage your finances.
2 – It Takes Immediate Effect
Although you can have a springing power of attorney which takes effect when you become incapacitated or disabled, the right to act may be delayed by the process to verify your medical condition. The goal of a power of attorney is to enable someone to act immediately during a time when you are unable to do so yourself, thus a springing power of attorney is often undesirable. A durable power of attorney avoids this problem, but it does take effect immediately. The person you authorize can act even if you aren’t ill. This is one of the most important things to know before signing a power of attorney.
3 – You Can Change or Rescind
A durable power of attorney is not permanent. As long as you are still capable to act, you can change or revoke it at any time. As a general rule, it’s best not to alter or mark-up existing documents. Instead, you should revoke old versions and create new ones. Originals are often needed so you may also destroy originals, assuming copies were not made as well.
4 – They’re Invalid Upon Your Death
Another critical fact about power of attorney documents is that they’re only valid while you are living. Once you become deceased, they are no longer valid. The terms of your will apply instead. If your estate must go through probate, then the courts will formally grant powers to the executor named in that will.
5 – Powers Can Be Abused
Unfortunately, anything that grants powers to others can be abused. This is why it’s important to select someone that you deeply trust for your power of attorney. In cases where finances are mismanaged, there is no guarantee that you can recover what was lost. You must sue for damages in court and hope that you can recover at least a portion of your losses.
Summary of 5 Things to Know Before Signing a Power of Attorney
A power of attorney can be extremely helpful and important for estate planning, but it comes with inherent risks. To protect yourself and your estate, think carefully about who you assign to each type of power of attorney. Avoid generic online forms and other do-it-yourself solutions. Given the importance of this document, consult with an attorney to prepare and sign the document. This applies to any legal document related to your estate plan. If you do not yet have an attorney, contact our team to schedule a consultation. We would be happy to assist with your estate planning needs in Massachusetts.