In today’s fast-paced world, it’s not always easy to get everything done. With so many responsibilities, tasks, and appointments to manage, it’s easy to lose track of what needs to get done and when. What many do not realise is that a simple document known as a lasting power of attorney can help protect your well-being and ensure that in the event you are unable to take care of your own affairs, someone you trust can step in on your behalf. If you haven’t yet established a power of attorney but would like to do so, this blog post will answer some common questions.
What Is a Lasting Power of Attorney and Who Can Be Appointed?
A lasting power of attorney is a legally binding document in which one party, known as the “donor” appoints another party as their agent (known as an attorney) to take control of their financial affairs in the event that they are unable to do so themselves. The power of attorney can be granted for property and finance, health and welfare, or both.
In the case of health and welfare, the attorney will have the authority to make decisions regarding medical care and insurance coverage. This can include but is not limited to decisions regarding hospital stays, surgical procedures, and more.
Power of Attorney Types & Documents
There are three basic types of power of attorney documents: Durable Power of Attorney for Financial Affairs, Durable Power of Attorney for Health Care, and Specific/Nondurable Power of Attorney. The following are details of each type. A Durable Power of Attorney for Financial Affairs is a document that allows the attorney to make financial decisions on the donor’s behalf. It remains in effect while the donor is alive and can be revoked at any time by the principal.
A Durable Power of Attorney for Health Care is a document that allows the attorney to make medical decisions on the donor’s behalf. It remains in effect while the principal is alive and can be revoked at any time by the principal. Under this type of power of attorney, the attorney makes medical decisions for the donor. This may include, for example, decisions about hospitalisation, surgery, the administration of medication, or various other medical decisions.
A Specific/Nondurable Power of Attorney is a document that grants the attorney the authority to make financial decisions on the principal’s behalf only during a specified period of time, up to one year.
When You Need a Lasting Power of Attorney
The best time to create a power of attorney is before you need it. That way, you’ll have peace of mind knowing that it’s in place and ready to go if and when the need arises. Whilst you have the mental capacity, you should make a Power of Attorney to avoid unnecessary expenses in future and the uncertainty and anxiety your family and business partners would face if you become incapable of making decisions.
Having a power of attorney prepared in advance can help ensure that, when the time comes, your affairs will likely be in good hands.
Responsibilities of the Attorney
As the attorney, you’ll have the authority to make financial decisions for the donor, including paying bills, managing investments, and making purchases on their behalf. The attorney has the same legal obligations and responsibilities that a person who owns the assets has, including paying taxes and following any other rules (and/or restrictions) of the donor’s financial institutions. The attorney responsibilities include making sure that the donor is informed of their power of attorney and understands how it works and how it can affect their financial affairs. The attorney should keep records of the financial decisions they make on behalf of the donor.
How to Create a Power of Attorney (POA)
Anyone can create a power of attorney, and it’s important that you do so as soon as possible. The individual making the POA will need to consult with the attorney(s) and will be required to complete a document. This can be a lengthy process, so it’s advised to have professional assistance to draw up the documents and advise you through the process. The attorney may suggest that you choose a spouse or a child who is trustworthy, has a good head for finances, and will be diligent in making financial decisions on your behalf.
If you have a family member or friend who you trust, you can name them as the attorney. It’s important to note that the attorney will be legally responsible for the financial decisions they make on your behalf, and they must act within the best interests of the donor and within the Mental Capacity Act.
For any more information please contact us