Tuesday, November 07, 2006

Power of Attorney

"Okay, I'm lying in a hospital bed, comotose, hooked up to a machine. Who's going to pay my bills, get my mail, file tax returns, cancel my subscription to Cats'R'Us magazine, . . ."

Good question. Have you made adequate plans? Estate planning is more than just planning what happens to your assets at your death, but also what happens to your assets during your disability. That planning should include executing a power of attorney document.

A General Power of Attorney form authorizes an individual (called the attorney-in-fact, but they don't have to be an attorney, thankfully) to act on your behalf. There are different situations when you may want this. For example, you are going to be out of town but you want someone to sign documents on your behalf in your absence. A power of attorney (POA) form can handle that simple assignment.

Or, you can have a Power of Attorney authority that "springs" into existence only when you are disabled, as determined by your physician. With a "springing power of attorney", your attorney-in-fact only has authority when you are unable to act due to a disability. Until that point, they don't have any authority.

Upon your death (which we hope doesn't happen soon), all authority under the POA is extinguished and your attorney-in-fact no longer has any ability to act. What happens in that scenario is a topic for another day.

Getting a will or trust executed is an important part of the estate planning process, but don't forget to cover all the bases and have a POA executed.

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