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Legal:
Thomas M. Butz  The
Facts about Powers of Attorney
Thomas
M. Butz is a Partner in the law firm of Smith Butz, LLC and
concentrates his practice in the areas of Estate and Trust
Planning, Estate and Trust Administration, Asset Protection and
Civil Litigation. Smith Butz, LLC is a full service law firm
located in Southpointe at 125 Technology Drive, Suite 202,
Canonsburg, PA 15317. Please call 724-745-5121 or visit the
Website at www.smithbutzlaw.com.
Are you prepared if
an illness, an accident or even just the effects of aging cause
you to be unable to communicate with your doctors about your
healthcare treatment, or make it impossible to handle your
personal financial affairs? The harsh truth is that most
families will, at one time or another, confront these very
issues. In order to prepare for these issues, it is important
that a Power of Attorney be part of your financial and estate
planning.
A Power of Attorney
is a legal document that allows you to appoint another
individual (your Agent) to transact business on your behalf. The
powers that you give to your Agent under a Power of Attorney can
be as broad or as restrictive as you like. It is possible to
give your Agent the ability to act on your behalf for one
transaction only, for example the purchase or sale of a piece of
real estate. It is also possible to give your Agent the ability
to act on your behalf on a much broader scope, for example to be
able to handle all banking transactions or any other financial
transactions. In effect, a Power of Attorney can allow your
Agent to transact any business that you yourself would be able
to transact on your own behalf.
There are different
types of Powers of Attorney that act in different ways. There
are “Nondurable”, “Durable” and “Springing” Powers
of Attorney. A “Nondurable” Power of Attorney can take
effect immediately and it will remain valid until revoked by the
individual who granted the power (the “Principal”), or until
the Principal becomes mentally incapacitated or dies.
A “Durable”
Power of Attorney will allow the Agent to continue to transact
business for the Principal even after the Principal has become
mentally incapacitated or otherwise is unable to make reasoned
decisions. Just as with the “Nondurable” Power of Attorney,
the “Durable” Power of Attorney may be used immediately, and
will remain effective until it is revoked by the Principal or
until the Principal dies.
Finally, a “Springing”
Power of Attorney only becomes effective at a future time or
upon the happening of a future event. Often, the “springing”
event is the illness or disability of the Principal. In using a
“Springing” Power of Attorney the document will usually
provide that the Principal’s physician will determine whether
he or she is competent to handle their financial affairs or make
reasoned decisions. Just as with the other two types of Powers
of Attorney, a “Springing” Power of Attorney will remain in
effect until the Principal’s death or until it is revoked by a
Court.
With all of these
types of Powers of Attorney, you can give an individual as much
or as little authority over your finances as you decide. Your
Agent, however, should be someone you trust implicitly. This is
extremely important. This individual will not only have access
to your financial records, but also to your assets as well. The
individual selected should be someone who will act solely on
your behalf, and not use the powers granted to him or her to
benefit themselves.
Another type of
Power of Attorney that is just as important as the financial
Power of Attorney is the Medical Power of Attorney. This
document allows you to designate an individual to make medical
or healthcare decisions for you, should you ever be unable to
make those decisions for yourself. Just as with the financial
Powers of Attorney, your healthcare Agent should be an
individual that you not only trust, but also someone who is
aware of your preferences regarding the type of healthcare
treatments that you would wish to have administered to you.
Both of the
Financial and Medical Powers of Attorney discussed in this
article are fairly straight forward and simple documents to
prepare and are well worth the time and effort it takes to have
them be a part of your financial and estate planning. The piece
of mind that it will give both you and your family cannot be
underestimated.
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