what is power of attorney?
Power of Attorney Explained

Power of attorney is essential in the event that you're incapacitated or not physically present to make decisions on your own behalf.

A power of attorney (POA) is a legally binding document that allows you to appoint someone to manage your property, medical, or financial affairs. Although it can be uncomfortable to think about needing one, a POA is an important part of any estate plan. Anyone over 18 can create a POA, and it's a common starting point for people who are ready to start formalizing plans for their future.

POA is typically used by those who cannot manage their affairs. This is generally due to an illness, aging, a disability, or simply being away for an extended period of time.

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Each type of POA gives your attorney-in-fact—the person who will make decisions for you—a different level of control. Some POAs take effect immediately after signing, and others kick in if you become incapacitated.

In this article, we'll explore the role of an attorney-in-fact and the authority a POA grants. We'll also cover the different types of POAs and tips for crafting a legally binding document.

Why do I need a Power of Attorney?

It is a good idea to have a Power of Attorney in place in case something happens to you and you suffer from temporary or permanent loss of capacity.

This could happen at any time because of illness, injury or disability.

If you do not have a Power of Attorney in place, a court or tribunal may appoint someone to manage your finances.

You can also appoint an attorney to pay your bills and manage your finances for many reasons, including if:

• you're travelling or living abroad
• you temporarily or permanently lose capacity through illness, injury or disability
• you wish to have someone else with experience to manage your finances.

What does a power of attorney do?

The POA gives the attorney-in-fact (used interchangeably with "agent") the power to make decisions about your affairs. The type of POA you create dictates which affairs an attorney-in-fact has authority over until the contract expires or you die.

The decision-making power of an attorney-in-fact takes effect at different times, depending on which POA you select.

Note: No matter which type of POA you choose, it will become null and void when the principal—the person who creates the POA—dies. Upon their death, the Trustee of the Trust or executor of the will becomes responsible for carrying out their instructions and distributing assets.

What can my Power of Attorney do?

You can use a Power of Attorney for almost any financial purpose including:

1. signing legally binding documents
2. operating bank accounts
3. paying bills
4. buying and selling real estate
5. managing investments
6. collecting rent.

How to set up power of attorney

A crucial part of estate planning is taking steps to set up a POA.

This is a seven-step process that includes the following:

1. Selecting an attorney-in-fact
2. Discussing responsibilities with the attorney-in-fact
3. Choosing the right POA to suit your needs
4. Writing the POA
5. Ensuring the POA is legally compliant
6. Filing it correctly
7. Making updates as needed

Related : Power OF Attorney

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