Why Powers of Attorney Are an Essential Part of Your Estate Plan
Durable powers of attorney are some of most important legal documents everyone should have. Without them, you and your family could face significant problems relating to your financial matters, medical decisions, and personal care. Please read on to find out why powers of attorney are an essential part of your estate plan and what these documents accomplish.
What Is a Power of Attorney?
A power of attorney (POA) is a legal document in which the person who creates it (the principal) authorizes another person (the agent) to perform certain actions on behalf of the principal. A POA can be extremely broad or narrow. The principal tailors the power of attorney to suit the specific circumstances at hand.
All powers of attorney are subject to Arizona statutes. To ensure the validity of any power attorney and compliance with state laws — and to make certain the POA does exactly what you want it to do — you should always get assistance from a knowledgeable lawyer before you sign a POA. Signing a form or using an online service is never a good idea.
Unless a power of attorney meets specific statutory criteria as a durable POA, the agent’s authority under the document ends if the principal becomes incapacitated. A durable power of attorney gives the agent authority to act if the principal becomes incapacitated. All POAs terminate with the death of the principal.
Everyone should have several different durable powers of attorney, preferably as part of a complete Arizona plan. These documents protect you and your family during your lifetime. They avoid substantial problems in the event you become temporarily or permanently incapacitated.
What Powers of Attorney Are in an Estate Plan?
In Arizona, a complete estate plan includes several durable powers of attorney and additional related documents. They address what happens with regard to your financial matters and health care decisions if you become incapacitated.
Your durable financial power of attorney authorizes a person you trust — and who has the necessary financial knowledge and skill — to manage your finances in the event of incapacity. Your agent under your durable financial POA can pay your bills, transfer funds into and out of your bank and financial accounts, and make other decisions about your finances. Your durable financial POA specifies exactly what authority your agent will have.
Your durable health care (or medical) power of attorney designates someone you trust to make health care and medical decisions for you in the event of your temporary or permanent incapacity. Arizona requires a different document, a durable mental health care power of attorney, to authorize a person to make mental health decisions on your behalf. You also may choose to have a living will, which explains your wishes regarding end-of-life decisions. The term advance directive or health care directive is often used to describe this collection of documents relating to your health and medical care.
Sometimes the person you designate in your financial POA is the same person you choose for your health care documents. But often it is not the same person. The agent under a durable financial POA has fiduciary responsibilities and should have an appropriate degree of financial knowledge and skill. For your health care powers of attorney, you should choose someone close to you who understands your wishes that you can trust to make the right decisions if it becomes necessary.
What Happens If You Don’t Have Durable Powers of Attorney?
If you do not have all these durable powers of attorney, and you become incapacitated temporarily or permanently, no one — not even your spouse — can make financial and health care decisions for you. The only exception occurs if you have joint financial accounts with your spouse or another person.
In the absence of durable POAs, your family will need to file conservatorship and guardianship actions in Arizona court, requesting appointment of a conservator to handle your financial matters and a guardian to make your health care and personal decisions. These proceedings occur at a time when every day is critical. They are time-consuming and expensive. Important decisions about your finances, health, and well-being cannot be made until a judge makes the appointments. Your financial assets will be depleted by the costs, when they should be available for your care.
In some cases, family members may disagree about who should serve as the conservator and guardian for a loved one who becomes incapacitated. These family conflicts can result in contested court proceedings, which take even longer and cost even more. Contested court actions also can ruin lifelong relationships among family members.
You can easily avoid all these potentially devastating consequences by creating the essential durable powers of attorney while you have the legal capacity to make them. If you become incapacitated, it will be too late to put them in place.
Do You Need a Lawyer To Make an Arizona Power of Attorney (or an Estate Plan)?
While technically you can make a power of attorney without assistance from a lawyer, it is very unwise to do so. Before you make any durable power of attorney, you should talk with an experienced Arizona estate planning attorney.
Using a form you find — or one that someone gives you to sign — or using an online service can create all kinds of legal problems for you and your family. Do-it-yourself or DIY powers of attorney or estate plans create the potential for a disaster to occur at a point when it will be too late to repair the damage, or extremely costly and time-consuming to do so.
Your durable POAs should be written to address your specific circumstances and wishes. You should choose the agents you designate very carefully. An experienced estate planning attorney makes certain that your documents are valid and complete under Arizona law, and that they reflect your exact wishes. If you want help deciding which individuals to designate, your lawyer can assist by explaining the important qualities for each of your agents under your durable powers of attorney.
Schedule a Free Consultation With an Experienced East Valley Estate Planning Attorney
At Peterson Law Offices, powers of attorney and estate planning are a focus of our practice. We provide top-quality services at affordable prices and can assist you in making durable powers of attorney, creating a new estate plan, or revising your outdated plan.
We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.