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What Is Power of Attorney (POA)?


No one relishes the idea of admitting their own mortality or thinking about what could happen should they become incapacitated. However, taking positive steps toward putting a structure into place should the worst occur offers peace of mind so you can rest assured that your wishes will be carried out for your own protection as well as those of your loved ones.

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One of the most important steps in this protection is choosing and creating a power of attorney (POA) agreement with someone you trust. The trusted individual you choose becomes a decision-maker for you if you are unable to act on your own behalf. In this agreement, you are the “Principal” and your POA is your “agent.”

Choosing Power of Attorney

The idea of allowing someone else to make critical legal and healthcare decisions for you is daunting, but choosing someone you trust completely to carry out your wishes, minimizes any risk of abuse. Most principals in this arrangement choose either a spouse or a close relative as POA. It may also be a close, trusted friend. It’s essential to make certain that the person you choose is not only trustworthy but also knows your wishes for critical decisions. You may also choose a second trusted person and add a requirement into the document designating power of attorney that specifies the POA report decisions to the second person for oversight.

Understanding Power of Attorney

Choosing a POA is an important tool in an overall estate plan, but serves as protection for yourself and your assets not after your death, but in the event that an accident or illness leaves you unable to make or express decisions. A legal power of attorney gives a trusted individual the right to make financial, legal, and medical decisions in the event you’re incapacitated due to:

  • Brain injury
  • Dementia
  • Unconsciousness or coma

The POA may be in place for the long term to provide protection against incapacitation or as a short-term solution. For instance, sometimes military personnel or law enforcement officers choose a temporary POA while on deployment or undercover.

What Does a Power of Attorney Do?

When you nominate someone as your power of attorney, your agent does the following in the event you are unable to do them for yourself:

  • Makes critical healthcare decisions, including when to start or cease treatments, and chooses doctors and caregivers
  • Makes financial decisions about investments or business
  • Sign documents in your place
  • Sells property
  • Opens accounts
  • Applies for benefits
  • Purchases life insurance for you
  • Maintains your real estate
  • Files your taxes

The person you choose as POA may act on your behalf to maintain all of your accounts and property as well as make critical decisions on your health and care.

Are There Limits to What a POA Can Do? 

A power of attorney has many rights and obligations but does not hold unlimited power and cannot violate the terms and parameters of the POA agreement without opening themselves up to charges of negligence or even fraud. A POA cannot do the following:

  • Change a will or estate plan
  • Tranfer the POA to someone else
  • Make decisions after the Principal’s death—the executor of the decedent’s estate takes over decision-making and property distribution upon their death
  • Use the Principal’s assets as though they are their own

An agent may only take compensation as outlined in the POA structure signed by the Principal while they are of sound mind and body. If you are interested or have any further questions about POA’s, contact a Fort Collins family law lawyer today to learn more.

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