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What Is Power Of Attorney?

What would you do if you couldn’t handle your own financial and medical decisions? What if your health deteriorates, making you unable to manage these arrangements? Delegating a power of attorney to someone you trust makes sure your affairs are in order.

What Does Power of Attorney Mean?

A power of attorney (PoA) allows you to put financial decisions in the hands of someone you trust. When deciding who to choose as your power of attorney, consider a family member or close friend that you believe can manage your financial and medical decisions the same way you would. Making a PoA part of your core legal plan guarantees that these affairs are taken care of for you if you can’t take care of them yourself.

In the PoA relationship, there’s a principal, the individual signing over their financial decisions, and the agent, the other person that the individual chooses. The agent assumes financial responsibility for the principal. It’s the agent’s job to protect the individual’s assets, oversee financial choices, and handle day-to-day finances.

When Would Power of Attorney Be Needed?

A PoA is beneficial for everyone, no matter your age, current health status, or income. You can’t predict the future, so it’s better to be prepared for the unexpected, which is why a PoA is helpful. It takes unknown stress off your shoulders and provides a stable, safe plan in case anything happens to you that makes you incapable of managing your affairs.

Are There Different Types of Power of Attorney?

There are several types of power of attorney used for different transactions:

Healthcare/Medical Power of Attorney

A healthcare or medical PoA allows a trusted individual to make medical decisions for the principal if they don’t have the mental capacity to do so. The principal gives consent to the agent beforehand to act as their medical PoA.

Non-Durable Power of Attorney

A non-durable PoA is only in effect for a certain amount of time. It allows the agent to act on the principal’s behalf for a specific transaction and time, and once that transaction is complete, the PoA is no longer in effect.

Durable Power of Attorney

A durable PoA allows the agent to act on behalf of the principal at any given time. There isn’t a set period for how long the PoA is active. Once the principal becomes unable to make decisions for themselves, the durable power of attorney goes into effect automatically and doesn’t end until the death of the principal.

Special/Limited Power of Attorney

A special or limited PoA is explicitly for a one-time banking or financial transaction if the agent is unavailable, sick, or has prior commitments. Limited PoA and non-durable PoA are similar in that they’re both for limited amounts of time, but limited PoA is only for financial affairs. Once the singular financial transaction is complete, the agent can’t act on behalf of the principal, and they no longer have any authority as the agent.

How Has COVID-19 Affected Power of Attorney?

In 2019, only 18% of Americans over 55 had a durable power of attorney. Today, that number has risen to 33%. The pandemic has nearly doubled the number of adults over 55 with a PoA, but over 50% of this population still doesn’t have one.

Because of the ongoing pandemic, more people are delegating a power of attorney in case they become ill and can’t make their own decisions. Now, more than ever, it’s vital to have a PoA. In these unprecedented times, you never know when your health could decline.

Wondering which power of attorney option is best for you? Inkwell can help you decide.

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How Can I Set Up a Power of Attorney?

Are you interested in a PoA relationship? Inkwell offers plans for all of your PoA needs. Our team of experts can set up a healthcare power of attorney to make health-related decisions for you. If you want an agent to handle personal affairs, medical decisions, and finances when you are unable to, a durable power of attorney is a great option. We provide plans for all ages because we believe everyone needs to be prepared for the unexpected. Contact us today to feel secure in your future finances and medical decisions.