A power of attorney is simply a legal document that gives you the right to name one or more individuals to step into your shoes and act on your behalf in certain pre-determined circumstances.
Two terms used in this document to describe the individuals affected are the principal (you), and the agents (others you delegate to act on your behalf). This document will give this agent (or agents) a very specific list of authorities and abilities to act on your behalf.
What are some of the common things that an agent does on a principal’s behalf? Here are a handful of the more common ones:
- Banking – access to the principal’s finances, including moving money to and from various accounts.
- Insurance – changes to a policy, including adding and dropping coverage.
- Auto/DMV – dealing with vehicles registered to the principal.
- Health Insurance – contacting health insurance companies on behalf of the principal to verify or appeal coverage or medical bills.
- Gifts – the ability for the agent to make a gift on behalf of the principal.
It is important to note that just because you have given someone power of attorney, it doesn’t mean you are no longer able to act on your own behalf. As long as you maintain the physical and cognitive ability to do so, you are able to continue to make your own decisions.
The power of attorney automatically ends when you die. However, prior to this you are able to make changes or revoke it completely at any time. It is important to pick someone who is detail-oriented and good at keeping records. But most importantly, choose someone who you trust.