Why Power of Attorney is a Powerful Decision
No Power of Attorney? No Time To Lose!
First, let’s go over some Power of Attorney (POA) basics
- A Power of Attorney is a legal document and the person you appoint under a POA is referred to as an attorney
- There are two types of Powers of Attorney – POA for Property (POA-P) and POA for Personal Care (POA-PC)
- A POA-P empowers an attorney to make decisions over your finances, property and investments and the type of POA this article will focus on
Many of the decisions we make in life may seem small and insignificant at the time, only to discover later they have huge implications.Take, for example, the decision to delay creating a Power of Attorney (POA). You may rationalize you’ve got plenty of time, you’re young, what’s the rush?
Well after reading this article you’ll discover you have no time to lose. We’ll discuss three powers associated with a POA and why creating one can have profound, life changing consequences.
You might wonder if I’m being a bit over dramatic, but there’s a reason this legal document includes the word power in its title. It has the power to impact the quality of your life, potentially for the rest of your life.
Let's look at the 3 powers associated with a POA:
1. You Have Power Because a POA Exists
Should an accident or illness cause you to lose mental capacity, you have power with a POA and are powerless without one. Once you lose mental capacity you can no longer create a POA. Let’s consider the following scenario.
You’ve been hospitalized for a prolonged period, are frail from being immobile for months and have lost cognitive capacity. The hospital agreed to release you, but only with caregiving support and home modifications.
- With a POA – Your attorney can make the necessary arrangements and advise the hospital you can afford the required home changes and ongoing care.
- Without a POA – Your fate is in the hands of the hospital. And because you have lost mental capacity, an institution decides where you live and whether or not you can leave.
Just like that, you lose control over who decides your living arrangements and your freedom to come and go as you please
2. Your Attorney has Significant Power under a POA
Your attorney does not own your assets, but does have decision making powers over them. They can access your bank and investment accounts and credit cards, sell your property and make all financial decisions related to your personal care. With this power comes many benefits and risks.
Benefits:
✓ Someone you trust is helping you pay bills, reconcile accounts, manage your household and liaise with your professional advisors
✓ You have support with decisions relating to your investments, selling your home and staying on budget
✓ Your attorney is held to a high standard, legally must act only in your best interests, and is accountable to record all transactions
Risks:
x Your attorney takes money from your accounts for their own use. Although you have recourse through the courts, the money may be long gone.
x Your attorney is incompetent and makes poor decisions relating to your investments resulting in losses.
x Your attorney, if also a beneficiary of your will, could advise the care team only cheaper care choices are affordable, ensuring more money is available to inherit.
The benefits outweigh the risks if you choose your attorney wisely
3. There’s Power in Your Attorney Decision
You have the power to manage the risks and reap the benefits by choosing the right attorney. Choose an individual who has demonstrated the following:
- Consistently acts with high integrity both in business and personal life,
- Understands the attorney role and its associated legal responsibilities
- Possesses strong financial acumen
- Has no conflict of interest and
- Communicates well and is a good listener.
The right fit could be a family member or a friend, but more often than not they lack the skills required, don’t have the time to do the job well, and struggle with challenging family dynamics.
Who you appoint under a Power of Attorney is a significant decision that will impact your quality of life and your nest egg
Alternate Options to Consider
There are alternate attorney options that can help you avoid highly charged family dynamics, conflict of interest, and competency concerns.
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Professional Power of Attorney
A professional POA offers impartial, expert attorney services.They have the knowledge and experience to manage tricky family dynamics and provide personalized support to help you pay bills and manage your finances when you no longer want to, or are unable to. -
Appoint a Trusted Overseer for built in accountability
Regardless of whether you appoint a family member or a professional POA, asking someone you trust, like a friend, family member or trusted advisor to oversee your attorney is a wise decision. The attorney would be required to regularly report on their activities and submit written summaries detailing their transactions.
Now that you know the 3 powers associated with a POA and the significant consequences of not having one, you literally have no time to lose!
Take action and create your Power of Attorney documents.There are several online Will and POA companies as well as highly qualified estate lawyers to choose from.
It only takes 20 minutes and less than $200 to create an online Will and POA documents
Learn more about our Professional Executor and POA services. We make sure your wishes are honoured and your assets are distributed accurately, efficiently, and as you intended.
Janet Jackson
