A power of attorney is simply a grant of authority by the person making it – the principal – to someone that he trusts to carry out his instructions in the event of his absence or incapacity. The latter person is known as an agent.
Generally, powers of attorney either govern healthcare decisions, or address property and financial affairs. Powers of attorney may be for a limited purpose, such as a particular real estate transaction, or they may grant more general powers. They also may be for a fixed duration, with particular start and end dates, or may be continuous until the death of the principal, unless they are revoked earlier.
Comprehensive estate planning usually includes a general, durable power of attorney for property and healthcare, which may cover a whole range of issues. But because powers of attorney automatically end at the death of the principal, they are not a substitute for other elements of an estate plan – which would usually include a will, and often trusts or other vehicles.
After power of attorney ends upon death, the will becomes effective, and any trust will continue on. The will focuses on the person’s wishes after passing away; the trust is considered a separate entity than the person individually, but its provisions only apply to the assets that it holds.
In a perfect world, an estate plan will have different elements that complement each other, from powers of attorney to wills and trusts. If you’re not sure that all those pieces are in place, then it is time to give the plan a review so that you get a sense of what is in place already, whether it is still working as intended, and whether any additional elements are needed to cover you and your family. Talk to us about this phase if possible in advance at Windy City Legal and we’ll glad to discuss the best options for your estate planning.