Powers of attorney are among the most important estate planning documents. Unlike wills, which only have legal authority after the testator dies, powers of attorney take effect when an individual becomes incapacitated.
Adults who draft powers of attorney can designate an agent or attorney-in-fact to oversee their medical care or manage their finances. People without spouses, those with unusual medical preferences and adults who run businesses are among those who might have a particularly strong need for the protection of powers of attorney. If the person who drafted the documents has a medical emergency that renders them incapacitated, the powers of attorney take effect and grant authority to the designated agent.
At what point does the agent lose the ability to continue making medical decisions or conducting financial transactions for the incapacitated person?
When the incapacitated adult recovers
The best outcome in a scenario where someone makes use of power of attorney is that their assistance is no longer necessary. Powers of attorney generally lose their authority when the principal who drafted the documents recovers. When they regain consciousness or their mental state improves, they can begin managing their affairs on their own behalf again.
When the incapacitation becomes permanent
There are different types of powers of attorney. Basic documents intended to designate temporary financial or medical authority only remain in effect during periods of temporary incapacitation. In scenarios where traumatic brain injuries, dementia or other medical conditions cause permanent incapacity, powers of attorney may lose their authority. Durable powers of attorney can retain their authority even in scenarios involving permanent incapacitation. They can effectively protect principals against the possibility of involuntary guardianship or conservatorship.
When the principal dies
Sometimes, the medical issue that causes incapacity proves fatal. The person who designated an agent may succumb to their medical challenges. At that point, the power of attorney loses its authority. The financial obligations of the decedent become the responsibility of their estate. Their personal representative may have to take over managing their affairs.
People with unique medical wishes and those facing serious health issues, as well as those preparing for retirement, may benefit from adding powers of attorney to their estate plans. Learning more about the limitations of these documents can help people put together the best estate plan given their preferences and concerns.