Understanding the Role of a Power of Attorney in Estate Planning

A power of attorney (POA) is a key part of planning for the future. It allows you to name someone you trust to manage your financial and legal affairs if you’re ever unable to do so yourself. Knowing that someone is ready to step in and handle things the way you would can bring peace of mind—not just for you, but for your loved ones too. To make the most of this important tool, it helps to understand the types of POAs available and how they differ from a healthcare proxy.

What Is a Power of Attorney?

A power of attorney is a legal document that gives someone—called your agent or attorney-in-fact—the authority to act on your behalf. This might include handling everyday financial matters, signing documents, or taking care of business decisions if you're unable to.

The powers granted under a POA can be broad or limited, depending on your preferences. Some are designed for very specific purposes, while others give your agent full authority to manage your affairs. Including a POA in your estate plan ensures someone you trust is ready to help when needed.

How Does a Power of Attorney Differ from a Healthcare Proxy?

A power of attorney and a healthcare proxy serve different but equally important purposes. While a POA covers financial and legal matters, a healthcare proxy focuses solely on medical decisions. If you're unable to speak for yourself, your healthcare proxy makes decisions about your treatment, doctors, and care.

You can choose the same person to act as both your agent under a POA and your healthcare proxy, or you can select different individuals for each role. The most important thing is choosing people who understand your values and will act in your best interest.

Durable vs. Nondurable Power of Attorney

One of the first decisions to make when setting up a POA is whether it should be durable or nondurable:

• Durable Power of Attorney: This remains in effect even if you become incapacitated. It’s a reliable option for estate planning because it ensures someone can step in right away if you're unable to manage your own affairs.

• Nondurable Power of Attorney: This type ends if you become incapacitated. It’s typically used for short-term or specific tasks, like completing a real estate transaction while you're out of town.

For most people creating an estate plan, a durable POA is the preferred option. It offers continuity and keeps your finances running smoothly during unexpected situations.

Choosing the Right Agent for Your Power of Attorney

Choosing an agent isn’t just a legal step—it’s a personal one. This person will have significant authority, so they need to be someone you trust completely. They should be responsible, financially savvy, and comfortable making decisions on your behalf.

It’s a good idea to talk openly with the person you're considering. Share your expectations, answer their questions, and make sure they feel confident about the role. You might also want to name a backup agent, just in case your first choice is unavailable when needed.

Incorporating a Power of Attorney into Your Estate Plan

Adding a POA to your estate plan helps prepare you and your loved ones for the unexpected. It ensures your bills get paid, your investments are managed, and your financial life stays on track even if you can’t handle things personally.

Review your POA regularly, especially after major life changes like a marriage, divorce, or the loss of a spouse. Keeping it current makes sure it continues to reflect your wishes.

Working with a legal professional can help you create a POA that fits your life and meets New York’s legal requirements. It also helps define the scope of your agent’s authority, so there are no surprises later.

Contact The Palermo Firm

Having a power of attorney in place is a meaningful way to take care of yourself and the people who care about you. Along with tools like healthcare proxies, it brings clarity to difficult moments and ensures your choices are respected.

To create or update your power of attorney, contact The Palermo Firm at 516-262-4040 or email us at contact@thepalermofirm.com. You can also use the contact form at https://www.thepalermofirm.com/contact. With offices in Plainview and Commack, we’re here to help you make confident, informed decisions.