The Basics of Powers of Attorney
Dec. 19, 2018
A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.
What is a Power of Attorney?
A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.
A power of attorney gives someone else, who does not have to be an attorney, the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf either generally or if certain conditions are met.
You must complete a document to give this power to someone else. This document may need to be notarized or go through another type of authentication process.
Types of Powers of Attorney
Several kinds of powers of attorney may be useful for your estate plan. These often overlap in many circumstances.
General Power of Attorney. This power of attorney is the most extensive option available. It gives the agent broad authority to make decisions and take action on your behalf. These are often used in situations where you become incapacitated or you are unavailable for any other reason. It is crucial that you trust the person you are granting this power to because this type of document can be prone to abuse.
Limited or Special Power of Attorney. This document applies to only very specific aspects of your life. For example, you may want to grant someone control over a property to maintain and manage it while you are out of the country. A document that fulfills this purpose may be limited in both timeframe and scope.
Durable Power of Attorney. Powers of attorney are generally only valid as long as you have mental capacity. However, a durable power of attorney will still be active if you lose your mental capacity. These can either remain in effect, or they can become active when you can no longer manage your own affairs.
Springing Power of Attorney. This type document only “kicks in” if certain conditions are met. The most common example is one where you lose mental capacity, and you have arranged for a loved one to take care of your affairs if this happens.
Healthcare Power of Attorney. A healthcare power of attorney gives someone the authority to make your healthcare decisions if you are disabled due to illness or an accident. This person will provide doctors with permission to operate, for example, and they may even make the decision of whether to “pull the plug” as well. It is critical that you let this person know your expectations regarding how you want your healthcare to move forward in these situations.
Someone who creates a power of attorney must be competent at the time to do so. That means that planning ahead is vital to creating a valid, legal power of attorney document.