Power of Attorney
By Taylor Kenck
This post is Part Six of the Series “Estate Planning Basics”
A power of attorney is often an overlooked component of an estate plan, but for some folks, it can be the most important document.
Introduction
When meeting with an estate planning attorney, most of the discussion naturally revolves around what will happen after you have passed away. However, one of the most important tools for your estate plan can actually be used during your lifetime. This tool is called a power of attorney.
Having a valid power of attorney can save your family significant struggles if you become incapacitated or unable to make your own decisions. For individuals that become incapacitated due to medical conditions (stroke, dementia, Alzheimer's, accidents, etc.), a valid power of attorney allows a trusted individual to manage your affairs and make decisions on your behalf–all without having to go through a lengthy and costly court process.
For these reasons, a power of attorney is a crucial part of an estate plan. And for individuals that might not have sufficient assets to necessitate a will, a power of attorney quickly becomes the most important document for your estate plan.
The purpose of this post is to describe a power of attorney, explain some common uses, and describe scenarios where a power of attorney can provide life-changing value.
Many forms for many uses
A power of attorney is a document that gives an individual power to act and make decisions on the signer’s behalf. Basically, the signer (known as the “principal”) authorizes another person (the “agent”) to act in their place.
This power of attorney has many forms and uses. It may be used to grant power over financial decisions, childcare decisions, healthcare decisions, etc. Powers granting medical decision-making powers are often called “advanced directives” or “medical directives.” These both contrast and overlap with a “living will,” which is typically the document where the person specifies what measures they want taken on their behalf for end-of-life decisions. However, a living will may also authorize a person to make those decisions on your behalf, so in this area they can overlap a bit.
A power of attorney can also be limited in important ways. For example, the decision-making power can be granted immediately, or it can be conditioned on a specific circumstance (for example, it might be conditioned on two doctors declaring that the principal is incapacitated). Either way, this is an excellent tool for individuals to protect themselves and their loved ones in very trying times.
Washington Law provides excellent parameters for powers of attorney. There is a lot of flexibility to allow you and an attorney to craft a power of attorney that fits your needs and circumstances. It also has less strict signing requirements than a will. This flexibility does not take away from the document’s importance. Ultimately, having a valid power of attorney can provide a huge benefit for families and loved ones, especially because alternative methods to gain a similar level of decision-making power are very costly and difficult to navigate.
Examples and scenarios
Because a power of attorney is only valid during the lifetime of the principal, its main use comes about when the principal is incapable or unable to manage their own affairs. Often, this situation arises from sudden and unexpected medical conditions, but there are other circumstances beyond this.
Below, I will show four scenarios where a power of attorney might be used, with additional discussion later on for each scenario:
Scenario 1: An elderly family member has a sudden, significant mental decline, and doctors believe a diagnosis of rapidly progressive dementia is likely. This family member is suddenly unable to care for themselves in any way. With a valid power of attorney, a loved one can step in and begin making decisions to manage the family member’s medical and financial affairs.
Scenario 2: A loved one has experienced a life threatening health complication during a surgery; the doctors plan on moving forward with an emergency surgery, and with a clear power of attorney on hand, the doctors know who will be making decisions during this emergency situation.
Scenario 3: You are on a dream vacation in a far away country when flights and travel are suspended (imagine, for a moment, a global pandemic). With poor internet connections, you are unable to manage your affairs abroad. Thankfully a valid power of attorney makes it clear that a trusted loved one can step in to manage your affairs, pay your bills, and care for your household in your absence.
Scenario 4: A close family member has passed away in an accident, leaving behind their minor children. While this family member did not have a valid will, they did have a power of attorney, and this power of attorney included a provision nominating a guardian for the minor children. Thus, a court will have the family member’s wishes to help guide the guardianship process, and in the meantime, the state knows who will be in charge of the children.
Each of these scenarios describes a different scenario where a power of attorney could be the difference between significant trials on one hand or clear direction on the other. Scenarios 1 and 2 are the classic examples most people think of when they create their powers of attorney. Scenarios 3 and 4 are situations where their benefits are huge, but very few people know about these uses.
Scenario 1 is the example I bring up most frequently because failing to have a valid power of attorney in this situation can create significant legal and familial burdens. When an individual loses the ability to make their own decisions through a diagnosis like dementia or Alzhiemer’s, they often need significant help to manage their own affairs. A valid power of attorney allows another to step in and manage the situation.
However, if a person suffering from something like dementia does not have a valid power of attorney executed prior to their illness, they very possibly do not have the legal capacity to execute a new power of attorney. This could create a scenario where a loved one would need to petition to be the guardian or conservator of this loved one, and that process is much more difficult and costly.
The medical complication scenario described in Scenario 2 is also a valid concern for many. Thankfully, many hospitals push patients to create internal documents like “living wills” to provide them guidance in these scenarios. But a valid medical power of attorney would also give this decision-making power.
The traveling situation described in Scenario 3 is an interesting application that is clearly spelled out in Washington Law. Under RCW Section 11.125.020(5)(b)(ii), someone can be considered “incapacitated” under the law if they are outside the country and unable to return. For those that travel, especially to remote or distant regions, this provision could be a huge help for managing their affairs.
Scenario 4 is a nightmare scenario for many. While it does little to soothe the pain of the family losing a parent of minor children, this application can be a huge help to that family and the courts. Both the sections of the Revised Code of Washington that discuss powers of attorney and the sections that discuss nominating guardians for minor children state that a power of attorney can be used for this nomination. Typically, a nomination in a power of attorney would be for a guardian to care for the children while their parent was incapacitated, but the law clearly suggests that the nomination can be testamentary (meaning after the parent has passed away).
These scenarios show why a power of attorney is a crucial component for estate planning. This goes beyond managing assets or medical decisions for elderly loved ones with diminished capacity, and it can even have a powerful effect on young, active individuals and families.
Conclusion
A power of attorney has many important applications to estate planning, even though the vast majority of its uses occur during the life of the principal. Washington State law provides a clear outline to show how a power of attorney can benefit individuals from all stages and walks of life. In fact, for some individuals, a power of attorney might be the most important component to their estate plan.
Crestview Law is happy to meet with you and evaluate how a power of attorney can benefit you and your family.
Please contact Crestview Law to schedule a free initial consultation to find out more.
Crestview Law has physical offices in Wenatchee, but we can serve clients throughout the state with our many virtual tools.
