We all plan for the future. Whether you're planning to go on a family vacation, run a marathon, or finally buy the dream home you've been saving for, it's easy to get caught up in planning for exciting things in the future and forget to prepare for the possibility of an emergency or life change. The good news is that with minimal time and effort you can create a plan that protects you and your family in making healthcare and financial decisions.
Creating a power of attorney (POA) should be one of your first priorities when it comes to preparing for your future. If you are a newly wed, recently graduated, have experienced the death of a loved one, or are just worried about the future, strongly consider creating POAs to appoint someone you trust to make decisions for you. Here are five reasons why you need to have powers of attorney in place:
1. Prepares for Health Emergencies.
Medical emergencies are stressful for everyone, and while we can never be completely prepared for the unexpected, having an established healthcare power of attorney makes such situations more manageable.
The agent you name in that document can manage your healthcare if you are unable. When you establish a medical power of attorney, provide a copy to your healthcare provider. If a situation arises where you are incapable of making healthcare decisions independently, the documentation you previously provided them will inform your healthcare provider of who to contact for assistance.
If you do not have a medical POA in place, you lose control over who will make decisions for you. It may be someone that you would not name under normal circumstances. As such, it's important to have someone you trust in charge of healthcare decisions should something happen to you.
2. Provides Financial Security in the Case of Incapacity.
Similar to a healthcare power of attorney, a general power of attorney gives another person the authority to make financial decisions on your behalf if you become incapacitated. Your agent can step in when needed to sign checks, pay bills, file taxes, and manage your accounts if you become incapable of doing so.
Your agent is the person who will protect your assets for you. If you do not have a POA, its likely that your family will not be able to effectively manage your accounts. They would have to petition the court to appoint a conservator to manage your finances and make financial decisions for you. While trusting someone else with your personal finances is scary, it's much easier to trust someone who you hand pick than to trust someone the court appointed for you.
3. Prevents Family Conflict.
A power of attorney gives you control over which family members have the authority to act on your behalf if you become physically or mentally incapacitated. If you do not have a power of attorney in place, you run the risk of conflict within your family over who should make decisions for you.
For example, in Tennessee and Kentucky the most common type of family conflict is between siblings who are caring for their parent. Siblings often disagree on the best course of action for caring for their incapacitated parent. if the siblings cannot come to an agreement regarding the care, they will have to petition the court to appoint a conservator.
In the same way, it is also common in cases of second marriages where the spouse's opinion conflicts with the opinion of the children. The court would be forced to select one of the family members or appoint a neutral third party to make decisions.
4. Helps Avoid a Conservatorship.
A conservatorship is an action before the court to have someone appointed by the court to manage your affairs. Even if all the family members agree on how to handle incapacity, a conservator will still be required as financial institutions will not let anyone access the accounts without an order from a court appointing a conservator.
If possible, leaving it up to your family to establish a conservatorship is something you want to avoid because it removes your control over who makes your decisions. The individual or entity appointed by the Court may not be someone who you would want or trust to manage your assets and healthcare. Additionally, the process of appointing a conservator can be costly and time consuming, especially if family members fight over who should be appointed.
5. Inexpensive and Easy to Create.
Powers of attorneys are a basic and easy document to create. They are very affordable and do not cost much. One of the most common reasons people fail to create an estate plan is that they don't know where to start. Creating a power of attorney is a great place to begin. Once you have a POA in place, your attorney can walk you through additional options that will protect your well-being, assets, and family relationships in the future.
Questions? We Are Here to Help!
The most important thing to take away is that a power of attorney gives you more control over your future. It provides the peace of mind that someone you trust has the legal authority to act on your behalf if you need them.
If you have questions about preparing powers of attorney, give us a call. We want to help. Our firm can make your estate planning process as stress-free as possible! Call our office today at 931-218-7800 or make an appointment online today.