While handling estate plans, the discussion eventually turns toward drafting a power of attorney. Some people may not see the need for this step or think it is only for those who are exceptionally wealthy.
The following details explain what a power of attorney is and why it is beneficial.
How does a power of attorney work?
A power of attorney is a document in which a person invests an agent to act on one’s behalf in specific scenarios. The person who assigns the agent is the principal. The agent can also go by the title of an attorney-in-fact. Both parties must agree to the arrangement with a signed document that a third party must witness.
A power of attorney takes effect when the principal desires. Such conditions could involve a temporary illness, unconsciousness or a permanent disability. The document can give the agent full authority in a principal’s financial and health matters or limit those responsibilities to specific issues. A principal can revoke the authority with a written notice.
Why do most people need a power of attorney?
A power of attorney gives a trusted individual the right to make decisions on behalf of another. The arrangement can prove vital when a decision is necessary and time is of the essence.
A person must be competent to assign power of attorney, so trying to designate an agent when a person’s mental health is failing can be too late. An agent is a valuable aid to managing one’s affairs in emergencies and protecting an estate, but the person must be worthy of implicit trust.
Most people will find themselves in a circumstance where they need someone to act legally on their behalf. When that day comes, having a designated individual with a power of attorney can be a lifesaver.
