An important part of a Colorado estate plan is a power of attorney. This legal document can be used to grant the authority to make financial decisions to another person if you are unavailable or unable to make financial decisions for yourself. For example, you might appoint someone to act as your authorized agent when you plan to travel overseas for an extended period. You might also want to have a power of attorney in place to allow a trusted person to make financial decisions for you if you are incapacitated by a serious illness or injury.
How does a power of attorney work?
When you draft a power of attorney, you can grant as much power as you want or restrict the authority of the agent you name to only a few types of decisions. You can also make the power of attorney immediately effective or restrict it to being used if a future event happens. For example, you might give your agent the power to pay bills for you out of your account but restrict his or her ability to purchase or sell property on your behalf.
Why powers of attorney are important
Having a power of attorney in place can protect you and your family if you are incapacitated and unable to make financial decisions for yourself. Without a power of attorney, your family will have to pursue guardianship through the probate court to help to manage your financial affairs. This can be a lengthy and expensive process. With a POA, your designated agent can step in to manage your finances for you once a doctor finds that you are incapacitated without involving the court.
People who want to write powers of attorney may want to get help from an estate planning attorney. A lawyer may help you ensure that your POA is drafted properly and likelier to be accepted by different financial institutions.