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What is a power of attorney and why do you need it?

On Behalf of | Apr 16, 2020 | Estate Planning and Wills

As you begin to think about estate planning, you might come across the term power of attorney. You may already know that a power of attorney gives someone else the legal right to act on your behalf. In Arizona, a power of attorney is an important part of estate planning. In fact, there are two different kinds of power of attorney that are equally important.

What is a power of attorney?

A power of attorney is a legal document that gives someone else the right to act on your behalf. Essentially, you give someone else the right to make decisions for you. The actions they take have the full effect of you making the decision for yourself. When you create a power of attorney, you’re giving someone else the right to make binding choices on your behalf.

The two types of power of attorney

In estate planning, there are two types of power of attorney. First, there is a power of attorney for financial decisions. The person who holds your power of attorney can pay your bills, deposit and withdraw money from the bank and otherwise manage your finances. You can create a financial power of attorney to be immediately effective, or you can make it go into effect only if you become unable to manage your own finances.

The second type of power of attorney is a medical power of attorney. A medical power of attorney identifies who you want to make decisions for you about your medical care if you’re unable to make those decisions for yourself. The document also lists in advance what your wishes are for end-of-life care.

How a power of attorney helps with estate planning

Managing your finances and ensuring that your wishes are honored are important parts of any estate plan. Preparing a power of attorney in advance ensures that you can provide for your needs, without interruption, during a period of disability. It also allows you to decide who makes medical decisions for you and gives them instructions regarding your wishes. An estate planning attorney may help you draft the power of attorney documents that meet your needs and goals.