Power of attorney is a document that gives a person the legal authority to make decisions for you. It’s one of the basic components of estate planning. If you are unable to decide or act on your own, your appointed attorney-in-fact will do so with your best interests in mind.
When does a power of attorney take effect?
When a power of attorney goes into effect may depend on how you draft the document and the type of power of attorney you choose. Two common types of powers of attorney used in estate planning are:
- Durable power of attorney: A durable power of attorney takes effect immediately upon signing and notarizing. The authority you grant them will continue indefinitely until you actively revoke it.
- Springing power of attorney: A springing power of attorney “springs” into effect only after a specific condition or event takes place. Many people use this to appoint an attorney-in-fact to act on their behalf if they are suddenly incapacitated, like if they fall into a coma.
Financial vs. medical power of attorney
You can also specify what type of authority you give to the person you appoint as attorney-in-fact:
- Financial power of attorney: The person you assign to oversee your finances. Aside from your bank accounts, this may also include your life insurance, retirement accounts and other assets.
- Medical power of attorney: Also known as Patient Advocate Designation in Michigan, this lets you name a guardian or primary caretaker in case of physical or mental incapacity. A medical power of attorney makes medical decisions on your behalf, including end-of-life care.
You can name one person for both medical and financial power of attorney. However, appointing a different person for each one allows them to focus on their respective responsibilities.
Do you need a power of attorney if you have a will?
It’s ideal to have both a will and a power of attorney. A last will only helps you manage your estate and affairs after death. However, a power of attorney can help you while you’re still alive.
Creating a comprehensive estate plan is key to safeguarding your assets and well-being. Additionally, working with a legal professional can give you more insight into what you may need to help ease the process for your loved ones after your passing.