Understanding how the process of granting Power of Attorney (POA) works is a hugely important part of the estate process – and one that many people tend to have misconceptions about.
To illustrate why, let’s start with a thought experiment. Of these individuals, do you think there’s one who doesn’t need to sign a power of attorney?
- Person A is a single, successful small business owner in her mid-40s, with no immediate medical or financial concerns
- Person B is only 23, but has recently been diagnosed with a major illness, one that may prove debilitating or fatal
- Person C has been happily married for 30 years, with two kids. His 80th birthday is coming up, but he has no pressing health concerns
In each of these situations, these people are in a position in which they’ll need a power of attorney.
Let’s explore this concept in a little more depth.
What Is a Power of Attorney, or POA?
In the broadest terms, a power of attorney is a legally binding document that allows you to appoint a person or organization to manage your affairs should you become unable to do so. This individual is known as the agent, or attorney-in-fact.
As you may have inferred from our little quiz above, powers of attorney are applicable in a variety of situations.
In particular, powers of attorney are important to have in place should a situation arise where you are incapable of making or declaring your own decisions regarding your healthcare and treatment options; financial obligations; real or personal property; or any other important decisions you may not be capable of making on your own.
Are There Different Types of Power of Attorney?
When you create a power of attorney, you will name an agent who will act on your behalf, and state what he or she is allowed to do within a given time frame.
It follows that not all powers of attorney are created equal. Indeed, there are many different types of POA, which largely fall under one of two umbrellas – general powers of attorney or limited powers of attorney.
Granting a general power of attorney gives broad powers to your agent to act on your behalf in all matters. Many individuals instead choose to limit the powers of attorney they grant, ceding their agent the power to act on their behalf only in certain matters, or for a limited window of time.
In most cases, in Illinois, you will want to create a Power of Attorney for Healthcare and Property. This will allow you to give someone you trust the legal authority to make decisions and take care of your wishes on your behalf when it comes to matters including:
- What type and level of medical care you receive
- Accessing your medical records
- Where you live
- How your health and housing needs will be paid for
- Settling health and life insurance claims
It is important to note that granting POA is not the same as filing a living will, though these two important processes often go hand-in-hand. A living will is a written document sets out how you should be cared for in the event of an unexpected emergency, or if you should somehow become incapacitated.
Most often, these wills deal with matters such as resuscitation, desired quality of life, and end of life treatments. With that in mind, there will always be circumstances and decisions not covered by your living will, which is why granting a healthcare POA remains so important; your trusted agent will be able to act as your proxy, helping to fill in any gaps or face any unforeseen complications when you cannot.
Have Any More Questions?
If you’d like to discuss any of the topics we’ve brought up in more depth, we’d be happy to help. Don’t hesitate to drop us a line with any questions or concerns about any aspect of the estate planning process, including wills, trusts, probate administration, or probate administration. Our talented team will make sure you feel supported and informed at every step of the way.
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