WHY HAVE A POWER OF ATTORNEY
A Power of Attorney (POA) is a document in which one person gives another person the power to conduct certain actions on his or her behalf. Examples of situations in which a written POA could be useful include:
• A single woman whose mother has Alzheimer’s disease realizes she would need someone to make financial decisions if she develops the same condition.
• An adult with a cognitive or psychiatric disability who lives and works independently, but needs assistance with financial decisions.
• An elderly grandmother with macular degeneration wants her daughter to identify bills received in the mail and write checks for them because she can no longer see.
• A wife and husband who want to give each other authority to manage finances should either one should become incapacitated.
POWER OF ATTORNEY FOR PROPERTY
With a POA a person (principal) can designate another person (agent) to act on the principal’s behalf. The agent can sign legal documents when the principal is unavailable, when the principal prefers the convenience of having someone else sign, or when the principal becomes incapacitated.
Example A:Sara (principal), a home bound elderly mother who becomes agitated and stressed when confronted with financial decisions, wanted her daughter (agent) to have the authority to write checks to pay for groceries, medicine and other personal items for her. Sara signed a POA to give authority for her daughter to perform not only these types of actions, but also to make any other financial decisions for Sara in the future.
Example B:Jack (principal), an Illinois National Guardsman who has been deployed overseas, signed a POA that gives his wife (agent) authority to sell their home. He also authorized her to redeem a certificate of deposit titled solely in his name that will reach maturity while he is out of the country. Jack’s POA limits his wife’s actions to those two transactions only.
WHAT DECISIONS CAN AN AGENT MAKE ON THE PRINCIPAL’S BEHALF?
The principal decides what actions can be taken by the agent. The following is a common list but the principal can subtract from and add to the list.
• Real property;
• Tangible personal property;
• Stocks and bonds;
• Commodities and options;
• Banks and other financial institutions;
• Operation of entity or business;
• Insurance and annuities;
• Estates, trusts, and other beneficial interests;
• Claims and litigation;
• Personal and family maintenance;
• Benefits from government programs, civil or military service;
• Retirement plans; and
POWER OF ATTORNEY FOR HEALTH CARE
A Power of Attorney for Health Care is a form which gives another person the power to make some health care decisions for you when you cannot make decisions for yourself.
You can choose who to give this power to. The person you choose is usually your spouse, a close friend, or a trusted relative.
This person is called your agent or “attorney in fact.” You can choose more than one agent, but only one agent can make decisions for you at any one time. If you do choose more than one agent, the first agent will make decisions for you until they are unable or unwilling to act on your behalf.
WHY HAVE A POA WHEN GUARDIANSHIP IS AVAILABLE?
The law allows for the court appointment of a guardian of the person and/or the estate should an individual become incapacitated.
The appointment of a guardian is not automatic. A hearing must be held in circuit court that is attended by the person petitioning to be guardian and the petitioner’s attorney, the person alleged to be incapacitated and his or her attorney, and witnesses. In some families there are disagreements about who is the “most capable” and who would be the “best” guardian often resulting in lengthy and costly court proceedings.
In addition to being more costly than a POA, a guardianship proceeding is conducted in open court, not in private. The court process may result in delays when timely decisions are needed to help a person who has diminished capacity. The circuit court process also can be bewildering and stressful to a person whose ability to comprehend information is impaired.
Authority for decision making rests with the court-appointed guardian. With a POA, a person could limit the decision making authority of an agent, while retaining the ability to make other decisions. With a POA a person could also avoid the continuing expenses of an inventory and annual accounting and attorney’s fees.