A power of attorney is a legal document that you can add to your estate plan to give someone else the ability to make decisions for you.
For instance, you are generally the only one who can access your financial accounts. But you can use a power of attorney to give someone else the ability to do this, allowing them to pay the bills, pay taxes and take other important steps on your behalf. Another example could be if you are in the hospital and you are incapacitated. A medical power of attorney could give your agent the ability to make decisions with your medical team that would normally be left up to you.
This can be very beneficial, but people are sometimes worried that they’re signing their decision-making power away. If you create a power of attorney, does that mean your chosen agent immediately gets to make decisions for you?
What triggers the power of attorney?
A power of attorney can be drafted this way, so that the transfer of power is immediate. But this is not usually how it is done.
Instead, the person who is drafting it will pick an event that triggers that power of attorney and puts it into effect. Most often, this is if they become incapacitated – if they suffer a stroke and wind up in the hospital, for example.
In other words, if you create a power of attorney, you don’t have to worry that your agent can start making decisions for you the next day. You are simply planning in advance so that, if something unexpected happens, you know that you have already selected an agent to help with the process. This is an important part of estate planning, so be sure you understand exactly what steps to take.