What is a Power of Attorney? Is there more than one type or can I use one form for everything? I already have a Will and a named Executor – is this different? These are all questions we hope to illuminate for you in this post. Powers of Attorney are very important to have in place to protect yourself, your assets, and provide for your family. There are many different kinds of Powers of Attorney and every state is different. In Texas, the two primary types you will hear about are (1) Medical Power of Attorney, and (2) Statutory Durable Power of Attorney (sometimes called a financial power of attorney). The documents are two separate documents and you can have one Power of Attorney without the other or you can have both. They are not part of your Will but they are essential. For instance, although Texas statutes dictate what happens to your property in the event you do not have a Will, there are precious few laws that grant the same authority as Powers of Attorney. For that reason, Powers of Attorney may be even more important for you to have than a Will. The alternatives are expensive and burdensome.
A Medical Power of Attorney appoints one person to make medical decisions for you in the event you are unable to do so. This appointee is referred to as an agent. You cannot appoint two people as co-agents, but you can appoint an agent and then an alternate or two in case your first choice is not available. Texas released a new Medical Power of Attorney form in 2018 and the form is mandatory, meaning you cannot use an alternate form or make up your own form. If you are unsure if your form is up to date, we can review it for you or draft you a new one. If you do not have a Medical Power of Attorney in place, HIPAA (Health Insurance Portability and Accountability Act) or other privacy laws may prohibit a medical professional from speaking to anyone else about your situation, even a spouse or child who needs the information.
A Durable Power of Attorney appoints a person, two people, or an entity (such as a bank) to make financial decisions for you in the event you are unable to do so. A Durable Power of Attorney can delegate authority over transactions like real estate, income tax, stocks or bonds, banking, web commerce, or other financial/business related transactions. You can make a Durable Power of Attorney very specific (for John Smith to sign my loan closing documents on my house on November 1, 2021) or very broad (all powers listed below to John Smith until I say otherwise in writing or die). You can choose whether your Power of Attorney becomes effective immediately, or upon a certification by physicians that you are incapacitated and unable to make decisions for yourself. Consider a scenario where you are involved in an accident and unable to make financial decisions for yourself. During the scenario time frame, your financial advisor calls and needs confirmation from you for an IRA rollover. Without your consent (either individually, or through your appointed Power of Attorney) your financial advisor cannot make any changes to your account. The account terms are “frozen” as-is until that time when you are able to make decisions for yourself again, or you pass away and your designated beneficiary inherits the account.
No one can predict the future (see, for example, 2020). You never know when you will be traveling and become stranded in another country for weeks due to a pandemic, or be injured in a car accident and unable to make decisions for yourself. Rather than have your assets tied up indefinitely, consider executing a Durable Power of Attorney and a Medical Power of Attorney. In doing so, you pick decision-makers you trust, and you have peace of mind knowing it is taken care of the way you prefer.
If you have questions about a Power of Attorney, or need help navigating your estate plan give us a call at (254) 300-7909. We would be honored to help you.