Great question. If a person is alive but incapacitated, the person’s “Agent” pursuant to a Power of Attorney is granted certain powers to handle the person’s financial affairs. However, the Power of Attorney is limited to just the powers that are prescribed within the document itself. If there isn’t a Power of Attorney, a Guardianship proceeding (lawsuit) is initiated to determine the person’s incapacity and so that the Court can appoint a guardian. Guardianship proceedings are difficult and super expensive. They can be easily avoided by having a good, comprehensive Power of Attorney, carefully crafted so that its not overly powerful, but, powerful enough so that business gets handled during the period of incapacity.
Remember: Powers of Attorney are only valid during the principal’s lifetime. Upon death, Powers of Attorney are rendered invalid. More on that later.