If you haven’t considered what will happen to your estate after you die, you are not alone. 2 out of 3 in the US still don’t have crucial estate planning documents. (1) However, not making a plan can make life complicated and uncomfortable for you and your family. A “power of attorney” is a good example. We all need this type of legal document as we get older and face the possibility of losing the ability to care for ourselves properly. A power of attorney can give authority to someone else to manage some or all of your financial needs and health care decisions while you are alive. However, after your death, a power of attorney ends. 

What Is a Power of Attorney?

When you file a power of attorney, you, the “principal,” name someone to act for you in financial, legal, and medical matters. The person you choose is called your “agent.”

There are different power of attorney documents available, and you may grant as much authority or as little authority as you choose. For example, you may state that your agent can access your bank account to pay your bills and buy your groceries, but they may not access your account for any other purpose. You could even set up a type of power of attorney that doesn’t spring into action unless you become incompetent or incapacitated. 

Deciding On A Power Of Attorney

Talking with an attorney at length in a consultation can help you decide which type of power of attorney you might need. Your attorney can customize power of attorney documents to suit your exact needs. Power of attorney documents fall into some broad categories, including:

  • Nondurable Power of Attorney: lets your agent make decisions for you while you are still alive. These decisions could include something specific such as selling your home or paying your bills while you have surgery and physical therapy for an injury.
  • Durable Power of Attorney: allows your agent to continue making the decisions you’ve given them power over, even if you become incompetent and can no longer care for yourself. A Durable POA keeps you safe and cared for if you have a stroke or medical event that leaves you in need of a guardian. With a durable general POA, there is no need to fight in court about who will care for you and your estate. Your agent has the power to make those decisions for you and your estate until your death.
  • Springing Power of Attorney: This gives an agent power of attorney upon a specific event. You could set your agent to begin with a durable general power of attorney upon a doctor’s declaration of your incapacity. This kind of power of attorney works when you need it most. 
  • Health Care Power of Attorney: Gives specific control to your agent to make medical decisions for you. Your agent cannot override advanced directives or living wills that you have made in the past. However, this agent may make all other medical decisions for you when needed. This person should be someone you trust to act in your best interests. 

What Happens When a Power of Attorney Ends?

At the point of your death, your durable general power of attorney agent, your caregivers, and all family lose the ability to handle your estate unless they are named executors in your valid will. The agents named in your power of attorney documents can no longer make decisions for your estate unless also named as your executor.

The named executor of your estate handles all assets from the point of your death forward if you’ve written a will. If you have not written a will, a probate court judge will name an administrator to settle your estate. Someone can petition the probate judge to name them as the administrator of an estate, but it can take time to gain access to the estate’s accounts again.

If you’ve named the same person to the executor that you named your durable general power of attorney, then that person may continue to have access to your estate. Otherwise, the named executor or administrator makes all decisions for your estate after your death. 

Exceptions to the Rule

After your death, the agent for your power of attorney no longer makes any decisions unless they:

  • Are also the executor (administrator) of your estate
  • Own a joint account with you
  • Are a named beneficiary of an account for life insurance, retirement, or brokerage
  • Own property with you with right of survivorship

After death, the executor or administrator of your estate pays your bills, taxes, and creditors. They also inventory your estate and work with the probate court to distribute your assets. 

Planning with Power of Attorney

A power of attorney is a crucial part of planning for the end of life as it protects you from a court’s authority to make decisions for you if you become incompetent. This legal document allows you to decide about your life and assets by choosing an agent you trust to represent your best interests. However, after death, a power of attorney loses its power, and the decisions about your assets change hands to the executor or administrator of your estate. 

Making a will and deciding on an agent for a power of attorney can keep you feeling safe and secure about your future and the future of your family and loved ones. 

We Can Help

At Hogan, Edwards, and Blue, we prepare you and your loved ones for the unexpected difficulties of life. Staying ready for the day when you can no longer care for yourself makes it easier for your family to transition to caring for you in an end-of-life situation. We listen and work with you to choose the best types of power of attorneys for your estate planning needs. Contact us today and find out how we can help you stay prepared. 

 

Footnotes:

  1. https://www.caring.com/caregivers/estate-planning/wills-survey/