Power of attorney is one of the most important legal forms for estate planning and senior care. Along with wills and trust documents, it is an essential document for organizing your affairs. A power of attorney cannot change a properly drafted will. However, such a person can make many changes to the assets surrounding that estate. Here is how it works. Estate planning can quickly get complicated; working with a financial advisor goes a long way to simplifying the challenge. Estate planning can get complicated, but working with a financial advisor is one of the best ways to clarify and even simplify the challenge.

What is the power of attorney?

Power of attorney is when you give someone the power to make legally binding decisions on your behalf. This can mean managing financial assets, making choices about medical care, signing contracts and other commitments. A power of attorney can access confidential documents and their decisions are as binding as if you had made them yourself.

Most of the time, the power of attorney is a limited authorization. That is, you will give someone a power of attorney to do specific things or to act within a specific framework. For example, the IRS would generally not accept taxes filed by a third party; you have to file your taxes yourself. However, assigning a power of attorney to your tax preparer gives that person the power to report your taxes as if you had done so on your own. This is a common practice that allows the tax preparer to view a client’s confidential IRS and bank records, as well as file taxes on behalf of the client. Such power, however, does not allow them to sign contracts on your behalf or sell your car. Their authority is limited to reviewing your finances and filing documents with the IRS.

In some cases, you can assign what is called a general power of attorney. This is one of the three types of enduring power of attorney (the other two are special power of attorney and medical or medical power of attorney). With a general power of attorney, the person can make pretty much all of the decisions on your behalf while the assignment of power of attorney remains valid. People will often give a general assignment to a trusted family member or longtime friend if they are unreachable or unable.

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A power of attorney cannot change a will

Readers should note that issues such as power of attorney and inheritance law are very specific to each state. While this article can give you an overview on the topic, it should not be taken as individual legal or financial advice. All of the following apply to most jurisdictions, but readers should understand that some or all of these concepts may change from state to state. Seek out a lawyer before making decisions about your own affairs.

Writing a valid will is easier than most people think. The only legal requirement is that you be of sound mind when making your arrangements, that is, you have the legal authority to make decisions, and the will must be in writing.

In most, if not all states, a will does not need to be made by a lawyer, notarized, or witnessed. There are no specific forms that a will must take. While all of these things can help increase the likelihood that your wishes will be fulfilled and enforced, they are not necessary.

As long as a will is valid, a power of attorney cannot modify or rewrite it. This does not fall within their field of competence even if the assignee expressly says the opposite in his assignment of power of attorney. Any will drawn up by proxy is void on its face.

If a will is invalid, a power of attorney can challenge it and explain why the will should not be executed, in whole or in part. Typically, to challenge a will, you must show that the person was not of sound mind, competent to make their own decisions, or otherwise able to take legally binding action. (As an extreme example, someone with a gun to their head would be mentally able to change their will, but those changes would still be invalid. This would be known as “coercion.”) However, it would be rare, because in most cases someone must be dead before anyone can challenge the validity of that person’s will.

In most states, the power of attorney ends when the beneficiary dies. At this point, the individual’s legal rights are transferred to his estate. The executor takes over and manages from there all the affairs of the deceased. The result is that the power of attorney cannot modify a will during the assignee’s lifetime, as he does not have the power to do so, and cannot modify an estate once the assignee has died, because his role as attorney takes on. end with the death of the assignee. .

But a power of attorney can still affect an estate

However, it is important to understand that a person with a general power of attorney can always change the circumstances surrounding a will. Specifically, they can make changes to your estate, essentially, before it becomes your estate. Although it has limitations, a general power of attorney is a general authorization. They can make important financial decisions on your behalf, which means they can often restructure your personal finances on their own judgment. This can functionally invalidate sections of your will if the power of attorney dissolves or changes the assets that you have assigned to various heirs.

For example, let’s say you write a will that gives all of your investments to Sam and all of your cash to Sally. You then make Sally your proxy. In your later years, Sally liquidates all your investments, saying that she wants the money to take care of you and pay for all the expenses. Whatever her intentions, Sally has rearranged your estate to suit if not fit. She will now get everything and Sam nothing, because all of your assets are in cash and Sam has no more investments to inherit.

It does not always require bad faith and unfair treatment, although it can also happen. Someone with your power of attorney can restructure your assets sincerely believing in your best interests, not realizing that they can blow up your estate planning in the process. Therefore, if you are including a general power of attorney as part of your senior care plan, it is essential to discuss your estate wishes with them in advance.

In a word

Someone with your power of attorney can’t change your will, and someone can’t write one on your behalf. However, this person can change your assets to change the way your will works in practice, so be sure to speak with your proxy about your wishes before making any assignments.

Estate planning tips

• When the time comes to make an estate plan, many moving elements can come into play. How do you want to distribute your wealth? What do you think you have? Who will need to take care of you and who will you want to take care of all of this? With SmartAsset’s matchmaking tool, you can find a financial advisor in your area to help you figure it all out. If you are ready, start now.

• Whether you are a beneficiary, a person with a power of attorney, or an executor, it is important to understand what is in the nest egg. Using a free retirement calculator is a good way to get a quick estimate of this.

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