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Law Offices of David Ravi Sitlani: Helping couples, families, and individuals understand the ins and outs of estate planning in Washington State.

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Archive for March, 2009

Why Have a Power-Of-Attorney?

Posted by sitlanilaw on March 12, 2009

Oftentimes I find that individuals are acutely aware of the need for a Will or a Trust because they want to be able to direct to whom their assets go when they die, and to name a Guardian for their children if they die.  However when considering their overall Estate Plan some individuals fail to consider what would happen to themselves or their children if they suffered an incapacity or were otherwise unable to handle their affairs.  This is where a Power-Of-Attorney becomes critically important.

It should be understood that a Power-Of-Attorney is a legal document drafted on behalf of, and for the benefit of, the Principal and names another individual to serve as the Attorney-In-Fact, permitting the Attorney-In-Fact to make decisions on behalf of the individual in certain circumstances.  Note that the Principal can decide when the Attorney-In-Fact may assume their authority.  This “authority” can take effect immediately, for a certain transaction (a limited Power-Of-Attorney) or upon the occurrence of a certain event.

Generally, the following documents are considered a Power-Of-Attorney: Medical Power-Of-Attorney, Financial Power-Of Attorney, and Living Will/Medical Directive.  A Medical Power-Of-Attorney allows the Attorney-In-Fact to make decisions on behalf of the Principal, who, under the terms of the Power-Of-Attorney,  is unable to make decisions for himself.  A Financial Power-Of-Attorney allows the Attorney-In-Fact access to the Principal’s bank accounts and other financial accounts so that the Attorney-In-fact can pay bills and other expenses for the Principal.  Lastly, the Living Will/Medical Directive allows the Principal to make medical decisions for themselves that can be implemented in the event they are unable to make those decisions due to an incapacity in the future.

These three documents, the Medical Power-Of-Attorney, Financial Power-Of-Attorney and the Living Will/Medical Directive can be combined together in one document or may be executed as three separate documents.  The latter is often done when the Principal wants to name different individuals to serve as the Financial and Medical Power-Of-Attorney.  Furthermore, under Washington Law, a Principal may also name a Guardian for their minor children in the event the Power-Of-Attorney comes into effect.

What happens if you do not have a Power-Of-Attorney?  Unfortunately, there are many answers to that question!  For example, in Washington State someone could attempt to be named your Guardian if you were incapacitated.  In the event that medical decisions had to be made for you and you did not have a Living Will/Medical directive, your family could be burdened with these decisions.  It would likely be a very difficult, emotional and challenging time.  These are the circumstances that one should consider when deciding whether to have a Power-Of-Attorney and who to name as an Attorney-In-Fact.

Lastly it should be noted that the above information is a brief overview of how a Power-Of-Attorney works and its role in Estate Planning, and is not intended to provide the reader with specific legal advice.

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