Powers of Attorney
Powers of attorney are an important, but often overlooked, part of any comprehensive estate plan. Properly designed powers of attorney can give you peace of mind for the future and provide needed continuity for an estate plan should you become unable to act on your own behalf.
Q: What is a Power of Attorney?
A power of attorney is a document that nominates a person, called an "agent," to act on your behalf in certain specified areas. The two most common forms of powers of attorney are a Power of Attorney for Property and Finances, and a Power of Attorney for Healthcare, each of which can be "non-springing" or "springing" powers (see below).
Q: Why do I need a Power of Attorney?
To answer that question, take a moment to make a list of all the things you do on a daily basis without really thinking about them. That list is going to be pretty long, but it probably includes items like paying the mortgage, balancing your checkbook, refilling a prescription, etc.
Now ask yourself who is going to do those things for you if the "worst" should happen. For example, you get in a car crash and are in a coma. Who is going to pay your mortgage? Who is going to make important healthcare decisions for you? A properly designed power of attorney can allow someone you trust to take action and make important decisions in your place, preventing the "worst" from quickly becoming "worse."
Q: What is a Power of Attorney for Property and Finances?
A power of attorney for property and finances is exactly what it says - a document allowing your nominated agent to manage your property and finances. For example, a typical power of attorney for property and finances would allow your agent to write checks on your behalf, perhaps to pay bills. What exactly an agent can do will be defined by the specific language of the power of attorney document.
Q: What is a Power of Attorney for Healthcare?
A power of attorney for healthcare is a document that allows you agent to make healthcare related decisions for you. For example, your agent might have the power to determine if you should be taken off of life support or not.
Q: So it's the same thing as a Living Will?
No. A Power of Attorney for Healthcare and a Living Will are different concepts, although they are often combined into one document (i.e. a Power of Attorney with Living Will provisions). With a Living Will, you are providing your doctor with advance instructions as to your wishes regarding areas like life support and nursing care. In contrast, a Power of Attorney for Healthcare, an agent makes these decisions on your behalf in the moment rather than giving your doctor instructions in advance. An attorney will help you determine whether a Power of Attorney for Healthcare, a Living Will, or both, are most appropriate for you.
Q: You mentioned "non-springing" and a "springing" powers of attorney before. What's the difference?
A "non-springing" power of attorney takes effect immediately after executing the document, meaning that the person you nominate to act as your agent may immediately begin acting for you according to the terms of the power of attorney. By contrast, a "springing" power of attorney is one that only becomes effective upon some defined event in the future. For example, you might set up a power of attorney to become effective only after you become incapacitated.
In Wisconsin, all powers of attorney are non-springing by default, meaning that unless you specifiy otherwise, they take effect as soon as you sign the document. Talking with an attorney will help you determine whether a springing or a non-springing power of attorney is correct for your circumstances.
Q: It seems like I'm giving up a lot of power to my agent. What if my agent acts against my wishes?
The idea of someone else being able to act in your place can be uncomfortable and even frightening for some. That is why it is important to remember that as long as you are competent to make decisions for yourself, your wishes will always override the decisions of your agent. Additionally, when your agent accepts their position, they owe you a fiduciary responsibility to act in your best interests. Violating this duty can leave your agent open legal ramifications.