Making financial plans of any kind entails looking at the full range of tools available. This holds true for estate planning, which can be approached in a wide variety of ways. One of those is signing a form to grant a trusted individual power of attorney.
A power of attorney, often referred to as POA, grants the person you designate the legal authority to act on your behalf on an as-needed basis. The designated person becomes an attorney-in-fact. That AIF can take actions that benefit the principal, who is the person executing the POA.
The AIF is not to take actions for his or her own benefit. However, he or she may be accorded a lot of discretion and decision-making authority. It depends on how much power to POA document grants the AIF, which in turn is completely up to the principal. A POA can grant the AIF very limited, constrained powers, or it can grant very broad powers.
A general durable POA is one that grants broad powers to the AIF. It gives substantial authority so the AIF will be able to address any circumstance that arises. It is a very common type of POA for estate plans.
Unlike a last will and testament, which is used in the event of death, a POA can be used while principal is still alive. One of its benefits is to preclude the need for a guardian if the principal becomes incapacitated and thus, unable for a time to manage his or her own affairs. If that happens, the AIF has the authority to handle those affairs.
Of course, the best ways to handle these matters are dependent on the individual facts of each case. POA may be a good tool for your estate planning but should be preceded by consultation with an experienced professional.
Source: NW Times, “Estate Planning: Why have a power of attorney” Christopher W. Yugo, Sep. 20, 2014