This week we will discuss when a power of attorney can expire. A power of attorney is a legal document that allows someone else to make decisions on your behalf. It is created for a specific purpose such as financial or health care decisions. If the power of attorney expires, it no longer gives that person the authority to make decisions on your behalf.
When you die
A durable power of attorney for finances automatically expires when you die. Once your attorney in fact gets the news of your passing, they no longer have the ability to carry out any actions on your behalf.
For a healthcare power of attorney, the same conditions apply. However, there is one caveat. The healthcare power of attorney will typically allow your healthcare agent to handle the disposition of your body, make the funeral and burial arrangements, or order an autopsy if warranted. Additionally, the agent can order medical records after your passing if needed for some legal reason. Other than that, the general rule is that all powers of attorney pass away when you do.
A power of attorney can expire if the original purpose no longer exists.
A power of attorney can expire if the original purpose no longer exists. For example, if you created a power of attorney to manage your finances, but you no longer need help with those decisions, the document may expire. Please note that you cannot revoke powers of attorney if you are incapacitated.
It is important to document the original purpose of the power of attorney and keep track of changes to your situation. You should update your powers of attorney when changes occur. This helps to ensure it’s still possible to use a power of attorney should the need arise.
If you revoke it
Unless you’re incapacitated, you can revoke a power of attorney. Revoking the power of attorney removes authority from the person you appointed. This is not something we’d necessarily recommend doing without good reason, but it’s possible. We strongly suggest that you name someone who is trustworthy so that you don’t have to revoke it.
However, if you want to revoke a power of attorney, do it in writing. Include the name of the person who is having their authority revoked. We recommend speaking with an attorney if you have to revoke a power of attorney.
Limited powers of attorney
A limited power of attorney is a document that allows someone to make decisions on behalf of another person. This happens when someone cannot be present to carry out decisions for themselves. A Limited Power of Attorney allows someone else to act as your proxy. For example, military families give powers of attorney that expire to a friend or spouse while they deploy.
How often should you renew a power of attorney?
Most powers of attorney are meant to last forever. However, you might need to create a new one to replace an old one. For example, a bank may be hesitant to honor a power of attorney that you signed 20 years ago. They may want you to have it updated. You may also want to update a power of attorney if you move to a new state.
If you have questions or need to get a power of attorney in Nashville, consider scheduling an initial call. This 15-minute call is free and allows us to see if we can help you with your situation.
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What it’s about
Many people want to appoint two or more people as joint decision-makers for wills and trusts. April and Mollie host a Q&A about when that’s a good decision….and when it isn’t.
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This week we are going to discuss how a power of attorney goes into effect. A power of attorney is a legal document that gives someone else the authority to make decisions on your behalf. But before that power of attorney goes into effect, certain conditions must be met. Let’s get into it…
How does a healthcare power of attorney go into effect?
A healthcare power of attorney is a legal document that allows one person, such as a spouse or adult child, to make decisions on behalf of another person who can’t make decisions for themselves due to illness or disability. A healthcare power of attorney takes effect if you are unable to make decisions for yourself or communicate those decisions to your doctors.
For example, if you are in a coma, then you are unable to make decisions. If you have a healthcare power of attorney it will go into effect. This means that your designated healthcare agent can make decisions on your behalf. They will have to follow the instructions that are set out in the power of attorney document. An attorney can help you write out the details of your healthcare power of attorney so that your wishes are clear.
To illustrate another example, let’s say you have an injury that requires your jaw to be wired shut and both of your arms are broken. It’s going to be very difficult for you to communicate your decisions. While the doctors are going to consult with you as much as possible, having a healthcare agent helps to make sure that your wishes are communicated properly. In short, a healthcare power of attorney can help effectively communicate your medical preferences when you are unable to do so.
How does a durable power of attorney over finances go into effect?
Your other power of attorney is your durable power of attorney over your finances. For financial matters, there are two times when a power of attorney can become effective. The first is the immediate power of attorney, the second is the “springing” power of attorney.
The immediate power of attorney
An immediate power of attorney is exactly what it sounds like. It takes effect immediately after you sign it. If you signed your power of attorney and then asked your attorney-in-fact to go open a bank account for you, they would have the power to do that.
The “springing” power of attorney
The other option is a springing power of attorney. We say it “springs” to life when you become incapacitated. You may also choose any date or other event that will bring it into effect, but you must clearly state that date or event in the document.
For example, your primary care physician or two other doctors must say you were unable to make decisions for yourself before a power of attorney becomes effective. However, there are multiple ways that this could be written into your documents. Ask a qualified attorney to help you determine the conditions for the power of attorney to become effective.
Don’t overthink how your power of attorney goes into effect
There are no wrong answers for when to have your power of attorney take effect. However, who you choose as your agent is more important. I encourage you to read our blog posts about who to appoint as your financial power of attorney and healthcare power of attorney. Choosing a proper agent is the most important aspect of a well-thought-out power of attorney.
In fact, the person that you appoint should follow the same guidelines, regardless of whether you have an immediate or springing power of attorney. However, some people do not want to have anyone else able to act for them while they are able to act. That is perfectly okay. For other people, it’s more convenient to have something immediately available. Again, there’s no wrong answer.
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Your medical power of attorney, also known as your healthcare power of attorney (HPOA), should name somebody who is accessible in an emergency. This is someone who will naturally be right by your side or someone who will be available by cell phone. This person is known as your “agent” for healthcare decisions.
Who is the best person for the job?
The ideal candidate for a healthcare agent is someone who can meet these basic qualifications:
You trust their judgment
It’s good to have somebody who is already in a position of making decisions with you and for you. Someone who you would trust to help you in carrying out the decisions that you have made. They also need to be able to take the information you have provided them and apply it to a different situation.
They can handle stress in an emergency
All medical emergencies are stressful. Pick an agent who has a history of making logical decisions at difficult times.
The agent will honor your values regarding medical decisions or end-of-life care
The agent you choose should be someone who knows you very well. You have discussed your values, goals, and preferences. Make sure your agent is someone who will act as your spokesperson and advocate.
You feel comfortable speaking to them about your death, dying, or care during incapacitation
In order to have a good healthcare agent, make sure that you are both comfortable discussing your values around death and dying. This is a serious topic that deserves a well-thought-out conversation. Be prepared to discuss what quality of life you want to have and what types of treatments you would want to have to maintain it. The more you speak together about your feelings towards death, dying, and treatments if incapacitated, the better your agent will be.
They will be available at any time
A good healthcare agent is someone who is going to be available when you need them. There’s no way for you to know when you will need your healthcare power of attorney. You need a reliable person who will answer the phone or make a return call as soon as they get the message that they are needed to make healthcare decisions for you.
Someone who lives nearby
Oftentimes it’s a good idea to choose an agent who lives close by. While not completely necessary, it is better to have an agent who will naturally come to the hospital to be with you during an emergency.
Someone who is younger than you
While not necessary, it is often very useful to have an agent who will likely outlive you.
Again, your healthcare agent should be someone who is easily accessible. Someone that you feel comfortable discussing your wishes with, even though they may be uncomfortable topics, and someone who respects your choices and would help you carry them out. Most people pick their spouse or adult child to be their healthcare agent. However, if you have a medical professional in your family, that person may be a good choice depending on their relationship with you. Ultimately it is up to you to choose someone you are comfortable with making these types of medical decisions.
Why do you need a healthcare power of attorney?
While not all healthcare power of attorneys ever go into effect, it is important to have one in the case of an emergency. You never know when you will be unable to make decisions or communicate your decisions for yourself. If you need help with creating a healthcare power of attorney, medical directive, or other documents that formulate a well-thought-out estate plan, consider scheduling an initial call with us.
This month we will discuss the subject of powers of attorney. In week one, we will discuss how to name a financial power of attorney. This is also known as a durable power of attorney.
There are many things to consider when appointing a financial power of attorney (aka an attorney-in-fact). This is an important position. Whoever you appoint would have the ability to make decisions regarding how you manage your finances. While it may seem obvious, it’s important to focus on choosing someone who is organized, trustworthy, and financially responsible.
What powers does an agent have when they have a financial power of attorney?
As stated earlier, the agent with a financial power of attorney can handle your finances just as you can. An agent will have the ability to go to your bank and handle banking transactions. They can contact your investment account broker and manage those funds. They can handle your insurance and sell your house. Of course, you want your agent to only make financial transactions in your best interest while you are incapacitated.
Can things go horribly wrong? Yes! Your agent has the power to clean out all of your bank accounts and sell your home. Heck, if they wanted to, they could take your assets, move to Fiji, and set up a little beach bar! I want to reiterate: It’s important that you choose someone who would never even think of doing something like that. You need to choose someone who will only have your best interest at heart.
Who should be your financial power of attorney?
When considering who should serve as a financial power of attorney, a lot of people are compelled to choose someone close to them. A lot of times this will be a relative, such as your children or possibly a sibling, but it doesn’t have to be. The agent could also be a close friend or even a professional if that is who fits that role in your life. In our practice, we like to make sure that our client acknowledges this very important point: the person you name as your agent in a financial power of attorney will have the ability to handle your finances pretty much the same as you will.
Choose an agent who can communicate effectively
Not only do you need to trust your agent, but we also recommend that you find someone that other people trust! While this element is not completely necessary, it may be important to you that your agent be relied upon to communicate important information effectively with the people in your life.
For example, if one of your relatives says to your agent: “Hey, my Aunty saved a lot of money and invested it well, how much does she have now and what has the spent money been used for?”. Ideally, you would have an agent that relatives intuitively trust to spend your funds in your interest. However, it would be really awesome if your agent took the time out of their day to respond thoroughly to your relative’s questions.
Your agent should be good at bookkeeping
In a perfect world, your agent with financial powers of attorney would be held accountable for the transactions coming out of your assets. A good agent can effectively answer questions about spending and back it up with good bookkeeping!
An agent with power of attorney does not have to live in your state
As we mentioned before, the era of digital banking is here and it allows us the option to choose from a larger pool of agents, regardless of their location. Now, many people think that their agent under a power of attorney cannot be someone who lives out of state. And that is simply not true. Sometimes it helps to have somebody who lives in the state, but that is not a requirement in Tennessee. We do so many things by email and telephone, texting, and online business transactions that your financial power of attorney person, your agent, will likely be handling any business transactions online.
Choose an agent who will outlive you
While this is not a requirement, it is a good idea to think about someone who will outlive you. Generally, when you are using your power of attorney, it’s when you’re incapacitated. While there are times when a durable power of attorney is used on a temporary basis, such as during a medical event, it is more likely going to be during a period when we are at the end of our lives and are experiencing some type of ongoing health condition that is not likely to improve. We recommend that you look for an agent who can help on a continuing basis. A well-suited agent allows everyone to relax and enjoy the time you have left on this earth.
Who should NOT be your durable power of attorney
Again, while it may seem obvious, it is important to reiterate that anyone who is untrustworthy, unlikeable, terrible with money, incapable of balancing a checkbook, or unable to effectively use online banking might not be the best choice for becoming an agent of financial power of attorney. The goal is to find someone who can keep good accounting records and knows exactly where your money went, down to every last penny! A good agent is someone who is willing to communicate with everyone without hesitation. The main point is that no one in your circle should be concerned that your agent is taking advantage of you if you are incapacitated.
Now, if you are not incapacitated, your agent should only be acting if you are telling them to do so. Even if you have your power of attorney take effect immediately, your agent can and should only act under your direction. If you find that the agent acts otherwise, there are legal actions you can take against them in court.
A power of attorney is a useful tool for organizing the “adulting” part of your life, especially in incapacitation. A financial power of attorney should be someone that you absolutely trust; someone who will not give pause to others in your life. Someone who is financially responsible and organized, and someone who is familiar with handling online transactions. It does not matter if your agent lives in your state. In short, find an agent you believe will always have your best interest at heart.
There are many types of powers of attorney. Many powers of attorney are used when creating a well-thought-out estate plan. Do you think you could use a durable power of attorney in Nashville? Schedule an initial call to see if we can help you with your situation.
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