A durable power of attorney may be the single most important document you ever sign. A power of attorney is a legal document where one person (the principal) authorizes another (the agent) to act on the principal’s behalf regarding financial matters.
At a minimum, the document helps ensure a trusted family member or friend will have the legal authority to help manage your affairs if you become incapacitated. If you lose the ability to handle your finances and you haven’t signed a power of attorney, then nobody has the legal authority to act on your behalf. In that case, a court may be asked to appoint a guardian to make decisions for you. The guardian appointed may be a stranger but will have complete control over your life.
But the right power of attorney can be so much more than that. Having the right power of attorney means having one that is tailored to the circumstances. A power of attorney is not a one-size-fits-all document. A power of attorney that works for estate planning purposes will often be insufficient when it comes to asset protection and planning for long-term care. This is because there are certain steps to implementing an asset protection strategy that cannot be taken using the typical power of attorney document. If the agent is not specifically authorized in the power of attorney document to take these steps, then most asset protection strategies will be off-limits. In other words, the wording of the particular power of attorney document you sign may make the difference between saving your house for your family and losing it to the cost of long-term care.
I cannot emphasize the importance of having the right power of attorney document in place. The document should reflect your unique circumstances and preferences. Consulting with an experienced estate planning or elder law attorney is the best way to ensure you are well-positioned for the future, whatever that may hold.