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3 reasons to add powers of attorney to your estate plan

On Behalf of | Jan 5, 2023 | Estate Planning |

Powers of attorney are legal documents that give one adult the right to act on the behalf of another legal adult. Some people draft powers of attorney to transfer Financial authority to a person they trust in the event of an emergency. Other people create powers of attorney to name someone to handle their medical affairs. There are even people who combine both forms of authority into one document and grant all of that power to one agent or attorney-in-fact.

Although they only have authority when someone experiences incapacitation, like prolonged unconsciousness or dementia, powers of attorney intimidate many people. Why are they such a common tool despite delegating important forms of personal authority to others?

  1. People want to protect their assets

Imagine if you get hit in the head with a piece of equipment at work and end up suffering a brain injury. You might be on life support and unconscious for several months.

During that time, your mortgage lender could foreclose on your home if you don’t have someone authorized to pay your bills, or your landlord might evict you and throw all your personal property into the trash because they can’t reach you and haven’t received rent payments.

When you have someone authorized to handle financial matters on your behalf in a power of attorney, you don’t have to worry about experiencing major financial hardship because of a medical situation.

  1. People want to protect their loved ones

Financial hardship won’t just affect you after a major medical event. You also have to think of your spouse, children and other dependent loved ones. Powers of attorney can provide the people who depend on you with an alternate form of support.

Your advance planning can also alleviate some of their stress because your closest loved ones won’t necessarily have to manage everything on your behalf and can instead rely on your agent to help.

  1. People worry about involuntary guardianship

If you suffer a severe brain injury or a doctor diagnoses you with Alzheimer’s disease, a family member or even a healthcare professional could seek a guardianship that gives them control over your daily life and resources.

When you create durable powers of attorney before you lose your testamentary capacity, those documents can designate someone to act as your agent instead of leaving you vulnerable to someone seeking guardianship over you. Choosing your own attorney and fact by drafting powers of attorney will prevent the wrong person from having control over your life in an emergency.

Understanding why other people choose to add powers of attorney to their estate plans can help you see the value in these common documents.