A Power of Attorney is a legal document which allows you to designate a person to conduct your business and financial affairs for you in the event you become incapacitated. If you were to become temporarily or permanently incapacitated, the person you designate as Power of Attorney would make sure your legal, financial and business affairs would continue being transacted in a manner you approve of. If you don’t have Power of Attorney documents, there are certain circumstances in which even your spouse would not be able to make decisions on your behalf.
Types of Power of Attorney
There are many different types of Power of Attorney document. A “contingent” Power of Attorney only goes into effect when triggered by a specific event, such as your incapacitation. For a contingent Power of Attorney to go into effect, a physician or a court will need to determine you are incapacitated and unable to make decisions for yourself. An Durable Power of Attorney goes into effect when it is signed, while a contingency, or “springing” power of attorney only goes into effect when a condition you specify occurs.
Choosing the Best Person for the Job
Because the person named as your Power of Attorney will be handling your legal and/or financial affairs, it is extremely important that you choose a person who is able to handle the necessary tasks. This is definitely a time when you should only consider which person will best be able to serve as Power of Attorney, rather than worrying about whether a friend or family member will be upset if you don’t name him or her. Of course, the person you choose as your Power of Attorney should first and foremost be someone you trust implicitly, but this person should also have the following qualities:
- A thorough understanding of finances;
- Good “business sense;”
- A commitment to take the duties of Power of Attorney seriously;
- Attention to detail;
- The ability to work with attorneys and accountants if necessary, and
- The ability to understand your values and wishes.
The agent designated in your Power of Attorney should also act in your best interests, both legal and financial, even under pressure from others to do otherwise. Before you make a final decision regarding the person you will designate as your Power of Attorney, you should have an honest conversation with the person you are considering. Be open about any issues you think might arise which your Power of Attorney would have to deal with, and ask whether they feel up to the task.
When your attorney drafts a Power of Attorney for you, it will specify exactly what powers the person you designate will have. The person designated in your Power of Attorney will be able to such things as:
- Make agreements with the IRS on your behalf;
- Give gifts to your beneficiaries on your behalf;
- Manage your assets;
- Transfer your assets;
It is important to discuss your needs with your Virginia estate planning attorney to ensure you make the right choices in designating a Power of Attorney. Contact us today to learn more!