After you pass away or when you become incapacitated due to a medical condition and can’t make important decisions on your own, the one who’ll be contacted first is either your next of kin or someone you’ve given power of attorney (POA) to.
A living spouse usually would be the first person in line as next of kin. He or she will then be followed by any children.
On the other hand, you can choose any adult to give your power of attorney to as long as you’re designating them legally (complying with all the legal requirements).
But even though the next of kin and a POA agent seem to be similar, given that either can make decisions on your behalf, they’re actually different from one another.
Next of kin
Your next of kin is a close relative or any of your family members. He or she is person related to you either by blood or marriage.
Should something unfortunate happen to you, they’re the one who’ll first get notified, unless you have other emergency contacts. The legislation enacted in each territory or state usually governs the inheritance law.
Most state or territory legislations consider the next of kin as the rightful person to inherit your assets upon your death if you hadn’t prepared your will prior.
Your spouse or civil partner is considered your next kin if you’re married or in a civil partnership — even if you’re separated.
If your spouse or civil partner has already passed away, your next of kin would be your children. If they’re under 18, your parents are regarded as your next of kin.
You can check this ultimate guide to make it easier for you to designate your next of kin.
Designating your next of kin is one of the most important things you have to thoroughly think about because that person will be the one handling your estate in case of your death and executing your final wishes. In case you may not know, one of the biggest mistakes to avoid when pre-planning your funeral is failing to clearly communicate your wishes to your next of kin.
Power of attorney
If the next of kin is a person in your family, a power of attorney (POA) is a legal document.
A POA allows you to appoint someone, who’s referred to as an agent or attorney-in-fact, to manage your affairs when you’re unable to effectively do so on your own or if you become incapacitated.
It’s essential to note that a POA is a flexible legal instrument. Of course, it’s a critical tool for someone who can’t make decisions for himself anymore due to death or a long-term mental illness or physical health crisis.
However, it can also help a person who only requires assistance in complex legal arrangements and even day-to-day affairs. For instance, it allows people to grant authority to individuals to represent them in financial, legal, and business arenas when they’re away or lack the specialised skills or specific knowledge required.
Here are the different types of power of attorney based on purpose:
- General power of attorney: A general power of attorney authorises your agent to handle everything from making business-related decisions to managing your finances and estate. It may indicate a termination date, specifying when the document is no longer valid.
- Special power of attorney: A special power of attorney defines the limited scope of the agent’s authority. For example, if you want to authorise someone to enter contracts or buy or sell real estate, you use a special power of attorney limited to that specific task. You can make the range of authority of your agent as wide or as narrow as you like.
- Healthcare power of attorney: A healthcare power of attorney helps you make medical decisions if you become ill or injured. If you’re unable to plan ahead for such situations and your family finds it challenging to figure out what to do next, you may use this power of attorney to manage your care.
- Durable power of attorney: A durable power of attorney is often created even before an agent is needed. It remains active throughout your life, hence the term ‘durable’. However, it won’t go into effect if it’s not yet needed.
The importance of understanding POA and next of kin
Death isn’t the only reason. If you become incapable of making decisions or carrying out important tasks, someone should have the authority and ability to deal with those matters for you.
Should you encounter an unfortunate event, unexpectedly become ill, or need to travel often for work, your next of kin or POA agent can protect your finances, look after your properties, and ensure that you get adequate medical care.
If you don’t plan for incapacity and the probate court can’t find your next of kin or the one you have is still a minor, it will appoint a conservator. The appointee in this court-ordered arrangement will make financial and personal decisions for you and oversee the management of your assets.
It’s crucial to choose who to make decisions on your behalf if you become unable to make those decisions for yourself.
Of course, you can’t choose your next of kin, so if you’d like someone else to manage your financial and personal affairs rather than leave the decision-making to your spouse, children, and other close relatives, you’ll need a POA. Just make sure that you’re choosing someone who’s honest, trustworthy, and legally qualified.
Knowing that you have a trustworthy next of kin or designating someone as your POA agent may give you peace of mind. That’s because your finances, medical care, property, as well as estate aren’t going to be handled by strangers if you’re no longer capable of doing the management yourself.
A lawyer can help you better understand these things if you’re unsure how to go about it, especially when preparing a POA document.
Disclaimer: This article provides guidance only and does not substitute professional legal advice. You should always consult with a lawyer for advice before making any decisions.