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By E. Drew Nelson, Attorney

Powers of attorney are legal documents that give another person you trust (your agent) the right to make decisions on your behalf. These powers of attorney may be broad or limited. A broad power of attorney can enable the person named as power of attorney to make financial decisions on everything from your retirement and bank accounts, disposition of real estate or other personal property, tax matters, Social Security benefits, and more. As an example, let’s say you plan to take a two-year-long sabbatical and sail around the world. In your absence, it will be important to have someone at home available to take care of things for you – whether it’s leasing out your house while you’re gone or filing your income taxes in your absence. When you create this power of attorney, you would name your agent and set an end date for the POA to coincide with your return.

A limited power of attorney may restrict the agent’s function to one specific task; for example, if one party is unable to attend a closing on a property, they may designate their spouse as their power of attorney just for this one occasion.

What happens if someday you become incapacitated and are unable to make decisions? Perhaps you are injured and are unconscious for a few days; or maybe the situation is permanent. In a case like this, the power of attorney might become effective when you become incapacitated and end when you are able once again to make sound decisions. Note that once you become incapacitated or are unable to make sound decisions, it is too late to assign a power of attorney.

It is human nature to avoid thinking about these “worst case” situations – especially when we are young, but in reality, it is important for all adults to have a plan in place to address these possibilities. With a power of attorney in place, you will have the comfort of knowing a person you trust is handling your affairs. Without one, your loved ones must go to court to request a guardian be appointed to represent your interests; the court will decide who should make these decisions – and it may not be who you would choose.

Medical Power of Attorney and Living Will

You will note that medical decisions were not mentioned above when discussing durable powers of attorney. In North Carolina, you should have both a durable power of attorney (for financial decisions) and a medical or healthcare power of attorney (for healthcare decisions). The healthcare power of attorney also allows you to designate an agent to make medical decisions on your behalf. In many cases, individuals choose to sign a living will at the same time as a medical power of attorney. The living will outlines your preferred treatment if you are unable to communicate that with your healthcare team. The medical power of attorney and living will are referred to as advance directives.

Powers of attorney and advance directives are an important part of your estate plan. We encourage you to discuss your decisions with your loved ones. Make sure they know where to find your important documents or provide copies of your advance directives and durable power of attorney to your agent(s) so they will have them on hand, if needed. We strongly recommend reviewing your estate plan whenever you experience a life change or at least every two to three years.

Ready to schedule an appointment to create or update your estate plan? Contact us today.