Retirement means making decisions on housing, income, investments, health care and estate planning—many of which can be emotional and may require major life changes. The timing of all of these decisions and their interaction also requires careful planning.
The Harvard Press says in its recent article, "Older & Wiser: Powers of Attorney," that because of the complexity of these issues, many people seek professional assistance regarding retirement living and estate planning. While many of us are tempted to avoid uncomfortable decisions, careful planning can save you thousands of dollars and can help you avoid unnecessary guardianship or institutionalization.
Powers of attorney are documents executed by an individual, the "principal," to give another individual, the "attorney-in-fact," power to decide issues on the principal's behalf. The principal has the ability to define the scope of decision-making authority in the power of attorney document.
Based on how they're drafted, powers of attorney can become effective in different ways. A durable power of attorney must be executed while the principal is still competent. It will be immediately effective and stay in effect, even if the person becomes incapacitated. A springing power of attorney is different. It becomes effective when the person is no longer competent.
A durable power can be used without the consent of the individual but must be used to the person's benefit. The springing power lets the person creating the document keep control over his or her affairs as long as it is practical. Both of these types of documents may be revoked by the principal in writing.
A comprehensive power of attorney is like a traditional power of attorney on steroids. At Idaho Estate Planning we refer to it as a Supercharged Power of Attorney. It has the power to avoid Guardianship or Conservatorship, prevent questions about the principal's intent, prevent delays in asset protection planning, protect the agent from claims of financial abuse and can even allow an agent to perform planning and transactions to make the principal eligible for public benefits.
Drafting and executing power of attorney documents is an individualized process that varies depending on the circumstances. So it's never a good idea to use a boilerplate form from the Internet that doesn't reflect the individual's needs and circumstances.
A properly drawn and executed power of attorney provides individuals peace of mind and assurance that their affairs in the future will be addressed appropriately.