Power Of Attorney: The Most Underrated Estate Planning Document
When people think of estate planning, they usually jump straight to wills and trusts, but the most overlooked—and arguably most important—document in an estate plan may just be a Power of Attorney (POA).
Attorneys such as our friends at The J M Dickerson Law Firm know just how impactful a Power of Attorney can be, and how important it is to have a strong one in your estate plan.
In this blog, we’ll explore:
- What a power of attorney is
- The two main types (and why you need both)
- What happens if you don’t have one
- How to choose the right agent
- Key powers to include (or avoid)
- How and when to update your POA
Understanding What A Power Of Attorney Is
A Power of Attorney is a legal document that gives someone (called your agent or attorney-in-fact) the authority to act on your behalf if you’re unable to do so yourself.
This can be:
- Temporarily (you’re traveling abroad)
- Unexpectedly (you’re hospitalized)
- Permanently (you develop dementia)
It can be limited or broad, immediate or springing. But most importantly, it ensures someone you trust is legally empowered to help you. Without it, you leave the door open to court-appointed guardianship—a slow, expensive, and very public process.
Two Main Types Of POA
There are two main types of POAs: the Durable Financial Power of Attorney and the Medical Power of Attorney. Exploring and understanding them both is important.
1. Durable Financial Power of Attorney
This allows your agent to manage your financial affairs:
- Pay bills
- Access accounts
- File taxes
- Sell property
- Manage investments
It can be immediate (effective the moment you sign it), or springing (only kicks in if you become incapacitated, as determined by a doctor or two).
2. Medical Power of Attorney (or Healthcare Proxy)
This lets your agent make healthcare decisions if you can’t:
- Approve or refuse medical treatments
- Admit or discharge you from a hospital
- Hire or fire doctors
- Access medical records
It’s the document that speaks when you’re unconscious, under anesthesia, or incapacitated.
What Happens If You Don’t Have A Power Of Attorney
Without a Power of Attorney, making important decisions in times of need can become much more difficult. Imagine this scenario:
- You’re in a car accident or develop a sudden illness.
- You can’t speak, write, or make decisions.
- Your spouse or child needs to access your bank account or approve a surgery.
If there’s no POA, they can’t act—no matter how close they are.
Instead, they’ll have to:
- Petition a court to become your guardian or conservator
- Pay court costs and legal fees
- Wait weeks or months for a hearing
- Report to the court every year thereafter
This process can cost thousands—and adds stress during an already painful time. With a power of attorney, you can avoid these difficulties.
How To Choose Your Agent Wisely
Choosing your agent is a big decision, and it is important to give it the consideration it requires.
Look for Someone Who Is:
- Trustworthy (they could be handling your money or your life)
- Responsible (they’ll be making critical decisions)
- Available (can respond quickly when needed)
- Emotionally steady (especially for medical decisions)
- Good with details (especially for financial POA)
This may be:
- A spouse or adult child
- A sibling or close friend
- A professional fiduciary (in complex or high-value estates)
Always include a first-choice agent and at least one alternate.
Determining What Powers Should Be Included
A good estate planner will tailor your POA to match your needs. Here are some powers you might include:
- Managing real estate
- Handling retirement accounts
- Gifting assets (within limits)
- Dealing with tax matters
- Applying for government benefits
- Creating or amending trusts (in some cases)
- Accessing digital accounts and passwords
But caution: some powers can be abused. Broad gifting or full financial control can be risky if your agent isn’t 100% trustworthy. This is why customization—and annual review—is so important.
Determining When A Power Of Attorney Ends
A POA ends when:
- You revoke it
- You die
- The agent becomes unavailable and there’s no successor
- A court invalidates it
Reviewing Your POA
Regular reviews and important updates to your POA are just as important as setting it up in the first place. It is crucial to review your POA:
- Every 2–3 years
- Whenever your life circumstances change (marriage, divorce, new relationships)
- When your agent becomes unavailable, untrustworthy, or unwell
- When you move to a different state (laws vary slightly)
Don’t wait for a medical emergency to find out your POA is outdated—or worse, invalid.
The Document That Does The Most, When You Need It Most
Wills are important. Trusts are powerful. But your Power of Attorney? It’s the MVP of your estate plan while you’re still alive. Don’t overlook it. Don’t put it off. Don’t assume your loved ones “can just handle it.”
When the unexpected happens—and it does—you want to be sure someone you trust is already legally in place to act for you.