What is a Power of Attorney?
A Power of Attorney is written authorization for one person to make decisions on behalf of someone else. The powers granted in a Power of Attorney can be broad or narrow depending on the circumstances, and can further have an open ended duration or be limited in both time and scope.
Types of Powers of Attorney
In Iowa, and especially in relation to estate planning, the two most common types of Powers of Attorney are Statutory Powers of Attorney and Durable Powers of Attorney for Health Care Decisions.
Statutory Powers of Attorney (sometimes referred to as General Powers of Attorney) grant certain powers related to managing the grantor's transactional affairs such as managing finances, paying bills, and buying/selling property. The types and limitations of powers granted in a statutory power of attorney are situationally specific and great care should be taken before granting such tremendous decision making authority to another person.
Durable Powers of Attorney for Healthcare Decisions, as its name implies, is used in circumstances where the grantor is incapacitated or otherwise unable to make their own healthcare decisions, and grants that decision making authority to a trusted third party. When a power of attorney is said to be durable, it means that the terms of the power of attorney survive the incapacity of the grantor so that even when they are no longer capable of granting such authority, it can still be recognized by healthcare providers as necessary.
Who can be named as my Power of Attorney?
You can name any trusted adult as your power of attorney in both your Statutory Power of Attorney as well as in your Durable Power of Attorney for Healthcare Decisions.
How Long Do They Last
Powers of Attorney can become effective when signed by the grantor, or at a later date or upon the occurrence of a specific event as determined by the language of the power of attorney. The most common options are for Powers of Attorney to become effective immediately, or instead to become effective upon the incapacitation of the grantor as determined by one or more attending physicians.
Powers of Attorney are only effective during the life of the grantor and immediately cease upon the grantor's death. Following the grantor's death, either the grantor's Last Will & Testament or Trust will determine who has authority to continue making decisions concerning the grantor's property and affairs.
Why are Powers of Attorney important?
The goal of all aspects of estate planning is to have the peace of mind that when you can longer make your own decisions or manage your own affairs, that your wishes will still be put into action. Well drafted Powers of Attorney give you and your loved ones peace of mind that decisions concerning your financial and physical health will be handled seamlessly if something renders you incapable of managing your own affairs.
Give us a call today to discuss how Powers of Attorney can be incorporated in your estate plan!