When we think of estate planning, it is usually with the idea of leaving our worldly goods to loved ones after we are gone. For this reason, most people in Illinois or elsewhere who are in the process of getting their estate in order will create a will or trust to provide for family members and distribute assets.
While these documents are essential, it is also important to include a power of attorney (POA). This legal instrument gives a designated agent or attorney-in-fact the legal authority to take any action outlined in the document on behalf of another person, called the principal. This agent may be the principal’s spouse, close relative, or trusted financial or legal representative who is responsible and trustworthy.
For residents of Frankfort and surrounding areas, it can help to discover tips on how to protect your assets and make smart life decisions that will give you peace of mind in the future.
Different POAs, different powers
Several types of POAs will give temporary or permanent authority to the agent and can take effect immediately or upon incapacity, including:
- Durable medical power of attorney
- Durable financial power of attorney
- Limited power of attorney
A durable medical or financial POA empowers the agent to make important decisions regarding medical care or financial issues when the principal is incapacitated or disabled. A limited POA gives the attorney-in-fact limited authority to act on behalf of the principal for specific concerns.
The financial POA manages estate income, assets and debt, which may include real estate transactions, payment of taxes, or the oversight of investments or property matters. A financial POA can manage retirement accounts, life insurance policies, annuities, or financial accounts not linked to a trust.
A POA for healthcare allows a healthcare agent to make important health or end-of-life decisions on behalf of the principal. If a doctor certifies the principal’s mental or physical incapacity, the health care agent will have the legal authority to access medical records and make decisions regarding the choice of healthcare provider, facility, treatments, medical procedures and medications.
Legal requirements for a POA in Illinois
There are requirements under Illinois laws for a POA to be legal, including:
- The principal must sign the POA before a witness who is 18 years of age or older.
- The POA must include a description of authorized actions and the name of the authorized agent.
Choosing a POA to make important decisions on your behalf not only safeguards your wishes concerning your own future healthcare needs, but also the financial security of your loved ones once you are gone.