Whether some one is just starting out in Maryland or nearing retirement, estate planning is an essential part of life. It involves everything from tax planning to drawing up a will.
One of the most important parts of life planning is designating a power of attorney who can manage things in the event of a temporary absence or disability. It’s not something that most of us want to think about, but having the right person in place will provide peace of mind.
Besides, it’s often too late to name an appropriate person if the decision is delayed until having an attorney-in-fact is necessary. Then, the decision would be left to the courts.
What is an attorney-in-fact?
An attorney-in-fact is someone who is granted the powers of attorney over another, and it’s one of the essentials of estate planning. The person granting the powers of attorney is known as the principal, and the attorney-in-fact is also known as an agent.
Whoever is granted the powers of attorney will have the legal right to make decisions regarding business, finances, or medical care. Despite the title, the designated agent doesn’t need to be a lawyer or have specialized legal knowledge.
Most people choose a family member, often the next of kin, but the attorney-in-fact can be anyone who’s trustworthy and responsible enough to make good decisions on behalf of the principal. The principal can also designate a group of people who must make decisions by consent.
For example, the patriarch of a family can name all of their children, who will then make decisions about the parent’s medical care or other determinations. This can be done by majority or unanimous vote, depending on how the powers are established.
Choosing the right power of attorney
There are several types of powers of attorney, so one can be chosen according to the life circumstances involved. For example, a general power of attorney has broader powers over decision making and can be ended at the principal’s request.
This is the type that’s often selected for members of the military when they’re serving overseas and is usually granted to a spouse so they can act on the principal’s behalf to:
- Purchase or cancel life insurance
- Sign contracts
- Make business or financial decisions
A durable power of attorney is the designation for an agent to make financial or medical decisions when someone becomes incapacitated. This one cannot be terminated except by a judge in cases involving malfeasance.
Special powers of attorney are usually granted situationally. For instance, a board member or business owner could designate a special POA to an agent so they can vote on issues or make pre-determined business decisions in their absence.
Healthcare powers of attorney are granted to someone to make decisions about medical care if the principal becomes incapacitated. This is commonly granted to a spouse or adult child.
Decisions made by an attorney-in-fact can be pre-determined by the principal, such as outlining preferences through a living will, to ensure that any decisions are aligned with the principal’s wishes. Being specific can help prevent conflict between family members and ensure that your desires are carried out.