Power of Attorney: Choosing Someone to Handle Decisions if You Can’t

A power of attorney can give someone you trust the authority to act for you when you can’t make decisions yourself. Putting that authority in writing ahead of time can spare loved ones a difficult court process and give them clearer direction during an already stressful period.

A power of attorney is one part of an estate plan, but it addresses a practical question that retirement and legacy plans can leave unanswered: who could manage your finances or make medical decisions if you became unable to do so? The right document and the right person depend on your circumstances and the rules where you live.

What a power of attorney allows

A power of attorney, often shortened to POA, is a written document in which one person—the principal—authorizes another person, called an agent or attorney-in-fact, to act on their behalf. The document can take effect immediately or only after the principal becomes incapacitated, depending on its terms.

While mentally competent, the principal can change or cancel the document. A durable POA stays in effect if the principal later becomes physically or mentally incapacitated. The authority granted by any POA ends when the principal dies.

There are several types, and they cover different responsibilities:

• Durable medical power of attorney: This gives an agent authority to make medical decisions when the principal can no longer make them. In Michigan, it is formally called a Patient Advocate Designation and takes effect only after doctors determine the person cannot make their own decisions. Other states may use terms such as health care proxy. A living will, which records medical wishes, can help guide the agent.
• Durable financial power of attorney: This authorizes an agent to handle matters such as paying bills and managing accounts. Depending on the document, the authority may begin immediately or only after the principal becomes unable to manage their finances. In Michigan, a financial POA signed on or after July 1, 2024, is durable automatically unless the document says otherwise, provided it is properly notarized or witnessed. Older documents and documents from other states may follow different rules.
• Limited power of attorney: This assigns authority for a specific task and a defined period. It ends when the task is complete or the stated date arrives.

After the principal’s death, a POA agent no longer has authority under the document. A successor trustee manages assets held in a trust, while a personal representative, also known as an executor, handles other estate matters after appointment by the probate court.

Why planning ahead can ease the burden

If someone becomes unable to make financial or medical decisions without having named agents, family members may need to ask a court to appoint a guardian for personal and medical matters, a conservator for financial affairs, or both. That process can take time, involve expenses and add strain for everyone involved.

Costs vary by state and by the professionals involved. The source material estimates that preparing POA documents may cost a few hundred dollars, depending on the attorney and location. In Michigan, filing for guardianship and conservatorship costs $350 in court fees. That figure does not include attorney fees, guardian ad litem fees or the yearly accounting a conservator must file with the court.

A court appointment can also leave the choice of decision-maker to a judge. The person appointed may not be the one the principal would have chosen. If relatives disagree about who should take on the role, resolving the issue can become more complicated and slower.

Planning in advance lets a person identify who they want to act and set out the scope of that authority. It can reduce the chance that loved ones will need to pursue court involvement just to manage essential decisions, while giving them a clearer sense of the principal’s wishes.

Choosing and preparing an agent

Selecting an agent deserves as much care as preparing the paperwork. Some people choose different agents for medical and financial responsibilities; others ask one person to take on multiple roles. The best arrangement depends on the person’s needs and relationships.

Before signing, talk with the person you’re considering. Explain your wishes and discuss what the role may require, including the responsibilities that come with acting for someone else. A person may be trusted but unable or unwilling to take on the job. If the conversation shows that’s the case, consider another candidate.

It can also help to make sure the proposed agent understands when their authority begins and what decisions the document covers. For medical decisions, a living will can provide written guidance. For financial authority, the POA’s terms should match the tasks the agent may need to handle.

Documents should fit your location

Names, signing requirements and rules can vary by state. Michigan’s automatic durability rule for qualifying financial POAs signed on or after July 1, 2024, is one example; it should not be assumed to apply elsewhere. If a document is older or was prepared for another state, an estate planning attorney can explain whether it meets local requirements and still reflects the principal’s wishes.

Putting these choices in place can feel uncomfortable because it means considering a time when you may need help. Still, a clear document and an informed, willing agent can give loved ones a starting point when decisions become urgent. A POA doesn’t replace the rest of an estate plan, but it can make a difficult situation easier to navigate.