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April 16, 2026
Why a Power of Attorney Belongs in Every Estate Plan
What happens if you become unable to manage your own finances – whether due to injury, illness, or old age? This is precisely what a properly drafted Power of Attorney (“POA”) is designed to address. Without a POA, your family may have to go through the lengthy, expensive, and intrusive process of obtaining a court-appointed guardian to take care of your routine financial matters.
A POA is a written authorization by which one person, known as the Principal, designates another, known as either the Agent or Attorney-in-Fact, to act on the Principal’s behalf. Legally, a properly executed POA empowers the Agent to make financial decisions in the Principal’s name within the scope defined by the POA. A properly drafted POA is fundamental to all stages of estate planning.
POAs come in several forms, but three are the most common: (1) A Durable POA gives the Agent the immediate ability to care for the Principal’s financial affairs; (2) A Springing POA becomes effective only upon the occurrence of a specifically defined occurrence – usually a medical event that is physician-certified; and (3) A Limited POA, which grants the Agent the authority for a narrowly defined period or purpose – such as completing a real estate closing. Each of these forms allows a Principal to establish the authority, timing, and scope of the POA to align with his or her personal objectives.
Having a POA is essential. First, it preserves control as it allows the Principal to choose who will manage his or her finances when they are unable to do so. Second, it prevents disruption, as it will allow many business to continue to function, bills to be paid, benefits to be maintained, and insurance claims to proceed without delay. Third, it reduces cost, uncertainty, and distress by minimizing the likelihood of emergency court intervention or family conflict during a stressful period.
Consider this: A married couple in their mid-40s with one child attending college. Neither the wife nor the husband have estate planning documents. Both parents work, but the wife handles all of their finances. She handles them so independently and thoroughly that the husband’s name isn’t on most accounts and he doesn’t have the passwords to any online bank or mortgage accounts. One day the wife is feeling dizzy and goes to the ER. Unfortunately, things quickly go downhill, and she ends up in a coma and hospitalized for over four months. The mortgage needs to be paid, the College tuition needs to be paid, but the husband doesn’t have any access to the family bank accounts. The banks and financial institutions won’t even speak to the husband because his name isn’t on any of the accounts and he has no POA for his wife. The husband turns to his counsel at Hill Wallack to file for guardianship of his wife. These proceedings take over a month, and cost in excess of $15,000 in legal fees and court costs. Eventually, the husband is appointed as his wife’s guardian and is able to pay the outstanding bills, now increased by late charges, and stop the collection phone calls.
The above real-life scenario could have all been avoided had the wife had a properly crafted POA.
A properly drafted POA offers peace of mind and tangible protection. It clarifies who is in charge when something goes wrong, what powers are granted, and when they may be exercised; it can also incorporate safeguards, including successor agents, co-agent requirements, and accounting obligations.
By acting now – before a crisis – individuals spare loved ones from uncertainty and expense, and ensure that financial decisions reflect their wishes. In short, a POA is not merely a form; it is a cornerstone of practical, compassionate planning for oneself and one’s family.
