Do You Need A Power of Attorney? You Might Be Surprised.
One of the most misunderstood and least utilized legal instruments available is the power of attorney, which allows you to decide in advance who will make important decisions for you if you can’t make them for yourself. For example, if you should get sick or suffer an injury that results in a period of temporary or permanent loss of consciousness, who will make critical decisions about your health care and your finances while you’re incapacitated? With a power of attorney, you can decide who you trust to make those decisions instead of leaving it up to the courts.
In Florida, there are a few common types of power of attorney, each of which addresses a different need: They include:
Durable power of attorney. A legal document in which one person, known as the “principal,” gives another person, known as the “agent,” authority to make financial decisions on his or her behalf, even if they become incapacitated. The designation of the agent ceases if the principal dies, at which time the principal’s will or trust will determine what happens to his or her assets, or by the court if there is no will or trust.
General power of attorney. With a general power of attorney, the agent typically is given wide-ranging powers to perform any legal act on the principal's behalf. The general power of attorney document must include a detailed list of the kinds of actions the agent is specifically authorized to take for the document to be valid.
Special or limited power of attorney. Serves the same function as a general power of attorney except that it is limited to a specific transaction or type of transaction, or covers a pre-determined period of time. This could be useful if the principal is in the middle of a substantial financial negotiation and wants to ensure that someone can complete the transaction if he or she becomes incapacitated. It’s also useful if, for example, the principal will be traveling out of the country and needs someone to be able to sign urgent documents while they are unavailable.
Heath Care Surrogate. This is similar to a power of attorney, but it allows the agent to make decisions about healthcare on the principal's behalf, instead of financial decisions. The health care surrogate is someone you authorize via a "Designation of Health Care Surrogate" form to make medical decisions for you when you are unable to do so. It's important that choose someone you trust completely as your your health care surrogate and discuss your wishes with him or her in advance. If your health care surrogate does not know which decisions you would have made, those decisions should be based on what is in your best interest.
One of the most common misconceptions about a power of attorney is that it's not necessary if the principle is married. While it's true that many of the decisions regarding joint finances typically covered by a power of attorney would be made by the spouse, without a power of attorney, spouses cannot access individual accounts, sell real estate, or manage retirement or investment accounts. This may not seem like an issue until one spouse is incapacitated and the other cannot manage their spouse’s finances or sell property. In that event a court guardianship would be required.
Also there are some scenarios where the principle needs a backup, or a spouse may not be the best agent for the principal’s best interests. For example:
Both the principal and the spouse become incapacitated at the same time, such as from an auto accident.
The principle prefers that an adult child manage their affairs if they cannot make those decisions for themselves.
The spouse cannot locate a potentially decades-old marriage certificate that proves the principal and the spouse are actually married, which can cause substantial delays.
A financial transaction is involved that would normally require two signatures, such as the closing of a joint bank account or sale of a jointly titled home, which can be handled with the agent’s signature with a power of attorney.
For a lot of people, the peace of mind they gain from having a power of attorney in place is incredibly valuable. It's an effective tool to make sure that your loved ones aren't burdened with additional stress if you should become incapacitated. This is because, when executed properly, it clears up any possible questions by answering them in advance.
If you would like to learn more about a power of attorney and whether it is right for you, or if you would simply like to talk to a qualified estate planning attorney about how to protect your family in general, contact Nexus Legal Solutions at 407-900-7722 for a consultation.