How Does Power of Attorney Work in Colorado Estate Planning?

A Colorado estate plan can provide key forms of legal protection for a testator who drafts documents, as well as their beneficiaries. Estate planning paperwork can designate beneficiaries to inherit someone’s property and guardians to take care of someone’s dependent children if they die prematurely.

Many estate plans also include specific provisions for the protection of the testator drafting documents if they experience a major personal emergency. Powers of attorney are among the most useful documents integrated into an estate plan for someone’s protection while they age. Making the right choices on the three issues below pertaining to the power of attorney paperwork can make a major difference for testators.

To get your free case assessment with our dedicated Colorado estate planning attorney, contact YouLaw Colorado at (720) 815-4421.

What Type of Documents to Draft for Power of Attorney in Colorado Estate Planning

There are several different types of powers of attorney that people can add to their estate plans. Often, people talk about powers of attorney in the context of what the documents do. Some people want to put together medical powers of attorney, empowering someone other than their spouse to handle their medical matters. Other people want financial powers of attorney, granting someone the authority to manage their business, pay their bills, or take care of their investments. Durable powers of attorney can also be useful, as they can protect someone from the possibility of long-term incapacitation by designating a person they trust to manage their affairs.

Medical Powers of Attorney and Advance Directives

Medical powers of attorney authorize an agent to make healthcare decisions on behalf of the principal in the event the principal becomes incapacitated or otherwise unable to communicate their medical preferences. This document ensures that an individual’s healthcare wishes are respected, particularly in situations involving end-of-life care or emergency medical treatment.

Financial Powers of Attorney

Financial powers of attorney empower an agent to manage the principal’s financial affairs. This can include paying bills, managing investments, and handling real estate transactions. Given the broad scope of authority that can be granted, selecting a trustworthy agent is vital. Our Colorado estate planning attorney can help you determine how to make this document work for your financial future. Individuals in Colorado can typically choose either a general or limited financial power of attorney.

General financial powers of attorney grant the agent wide-ranging authority over the principal’s financial matters. Limited financial powers of attorney, on the other hand, restrict the agent’s powers to specific transactions or time periods. Principals must carefully consider the extent of authority they wish to grant and tailor their documents accordingly.

Durable Powers of Attorney

Unlike standard powers of attorney, which are typically revoked if the principal becomes incapacitated, durable powers of attorney remain in effect even during times of incapacity. This means that the agent appointed under the powers of attorney can continue making decisions on behalf of the principal, even if the principal is unable to communicate or make decisions for themselves.

In Colorado, both medical and financial powers of attorney can be made durable by including specific language in the document that indicates the principal’s desire for them to remain effective despite their incapacity. This distinction is particularly important for individuals who might be at risk of developing cognitive or medical conditions that could impair their decision-making abilities in the future.

By making a power of attorney durable, the principal can ensure that their affairs will be managed by someone they trust, even during times when they are most vulnerable. This continuity of decision-making can provide peace of mind to both the principal and their loved ones, knowing that they will be taken care of in the event of an unexpected illness or injury.

Non-Durable Powers of Attorney

A non-durable power of attorney, sometimes referred to as a special or limited power of attorney, is tailored for specific transactions or time periods. Unlike its durable counterpart, a non-durable power of attorney becomes invalid if the principal loses mental capacity. This is particularly useful in situations where the principal cannot manage their affairs because of temporary circumstances, such as being out of the country or undergoing medical treatment.

Other responsibilities that can be delegated in a limited power of attorney include selling property, managing certain financial transactions, or handling business operations. The specificity of the document ensures that the agent’s power is confined to designated tasks, providing the principal with control over the extent of authority granted.

When creating a non-durable power of attorney, it is important to define the scope of authority with precision. The document should detail the specific powers granted to the agent, including any limitations or conditions. It should also clearly state the timeframe during which the power of attorney is effective, whether it is for a few days or several months.

Springing Power of Attorney

A springing power of attorney is designed to “spring” into effect upon the occurrence of a specific event, typically the principal’s incapacitation. This delayed activation feature is appealing to those who prefer to maintain control over their affairs until they are genuinely unable to do so.

The defining characteristic of a springing power of attorney is its contingent nature. The document must clearly outline the conditions under which it becomes active, usually requiring a formal determination of incapacity by one or more licensed physicians. This safeguard ensures that the agent’s authority is not granted prematurely, aligning with the principal’s desire for autonomy.

However, determining incapacity can involve legal hurdles and delays, potentially hindering the timely management of the principal’s affairs. Additionally, the requirement for medical certification of incapacity might raise privacy concerns for the principal.

What Are the Requirements for the Execution of a Power of Attorney in Colorado?

Under Colo. Rev. Stat. § 15-14-705, the execution of a power of attorney requires the principal’s signature or the signature of another individual in the principal’s conscious presence and at the principal’s direction. This requirement ensures the principal’s consent and active participation in the creation of the powers of attorney.

While Colorado law does not explicitly mandate notarization for all types of powers of attorney, it is strongly recommended and often required for the document to be recognized by financial institutions and other entities. Notarization adds a layer of authenticity and protection against fraud, ensuring that the principal’s signature is verified.

When executing a power of attorney, the principal must also be mentally competent at the time of signing. This means that the principal must have the mental capacity to understand the full implications of the powers of attorney, including the powers being granted to the agent and the circumstances under which the agent will act on their behalf.

Mental competence is a fundamental requirement because it ensures that the principal is capable of making informed decisions without any undue influence or coercion from anyone else.

Who to Name as Agent in Your Colorado Powers of Attorney Documents

The agent or attorney-in-fact designated in power of attorney documents has the legal authority to handle certain matters on behalf of the testator. It is therefore very important to choose the right person to take on that role. Some people separate authority into several documents and choose different agents for each document. Others choose a professional fiduciary to act on their behalf instead of selecting a member of their family.

Which Restrictions to Impose on Legal Authority When Executing a Power of Attorney in Colorado

Powers of attorney do not have to grant one individual total authority over someone else’s health care or finances. It is possible and even advisable to intentionally limit what authority someone’s agent has and when they can use that power. Some people, for example, limit powers of attorney by requiring that they remain incapacitated for a certain amount of time before someone can take action on their behalf. Including the right terms in the power of attorney paperwork can have a major implication on someone’s comfort and protection when they are at their most vulnerable.

Thinking carefully about the terms to include in power of attorney paperwork and seeking legal guidance accordingly can make a major difference for a testator’s protection and peace of mind.

What Other Documents Will I Need When Creating a Power of Attorney in Colorado?

Colorado offers statutory forms that serve as templates for creating powers of attorney. These forms, available through the Colorado Secretary of State’s website, provide a reliable foundation for what should be considered and included when drafting your document. They include essential elements such as the designation of the agent, the powers granted, and any limitations or conditions you require.

An often-overlooked aspect of creating a power of attorney in Colorado is the agent’s formal acceptance of their role. Drafting an acceptance form, which the agent signs, acknowledges their understanding of the responsibilities and obligations involved. This document thus serves as evidence of the agent’s consent and readiness to act on the principal’s behalf.

Our Colorado Estate Planning Attorney Can Help You Create the Powers of Attorney Right for Your Situation

For a free case review with our Colorado estate planning lawyer, call YouLaw Colorado at (720) 815-4421.