When you give Power of Attorney, you are granting a person the authority to make financial decisions on your behalf. The Power of Attorney can manage your financial, legal, and property matters, depending upon how much authority you give your agent. Also, your agent’s authority can begin immediately or start on a certain date.
How it Works
A Power of Attorney is a legal document where you (known as the principal) name an individual or an organization to be your attorney-in-fact or agent – and this person would step in and handle your personal financial interests, as stated in the Power of Attorney form, in the event you become incapacitated or unable to make decisions.
In the document, you spell out the various levels of authority you want the agent/attorney-in-fact to have. For example, you have the option to allow a Power of Attorney to take care of your typical daily responsibilities like purchasing groceries or paying bills while you continue to manage your major affairs. Or, should you become ill and mentally debilitated, a Durable Power of Attorney can have full control to take charge of all of your financial matters.
Contrary to belief, only a mentally competent person can appoint a Power of Attorney. That is why it is best to draft a Power of Attorney document while you have your faculties. If you are not mentally impaired, you can revoke a Power of Attorney at any time.
Types of Power of Attorney
Not all Powers of Attorney are the same. There are five types, each with various levels of control for specific circumstances. Here is a look at each:
- General Power of Attorney
This agent/attorney-in-fact has broad authority to make decisions and manage matters including your business, personal and business finances, signing documents, paying bills, making gifts, settling claims, and buying life insurance. This type of Power of Attorney could also be durable as explained below or it could terminate if you become mentally impaired or die.
- Durable Power of Attorney
If you become incapacitated, the Durable Power of Attorney remains in effect ensuring your financial matters will continue to be managed. A non-durable Power of Attorney ends upon the principal’s impairment and a court would have to appoint a conservator to oversee your affairs.
- Health Care Power of Attorney
If you are unable to express your medical treatment choices, the Health Care Power of Attorney – also known as a Health Care Proxy – gives authority to a person you choose to voice your choices on your behalf. If you develop a sudden medical crisis or have a progressive illness where you can no longer make decisions, the Health Care Power of Attorney will carry out your wishes.
- Pet Power of Attorney
What happens to your pet if you cannot care for it? This is where the Pet Power of Attorney comes in. You designate someone to take care and custody of your pet if you are traveling or unable to care for your pet yourself. This person would also have legal authority to make decisions about your pet’s care if they need a veterinarian’s care or other medical treatment. In the document you would also provide care instructions. This Pet Power of Attorney can be useful if you are going on vacation and leave your pet with a caretaker.
- Limited Power of Attorney
With a Limited Power of Attorney, you give specific authority to make certain, limited legal decisions on your behalf. This could include purchasing real estate or closing a business deal. The Special Power of Attorney could be utilized if you are out of the country or become ill. It’s a good choice if you need someone to take charge of your affairs, even on a temporary basis.
Everyone Should Have a Power of Attorney
It’s not just for the aged. No one knows what’s coming down the road during our lifetime. An illness or an accident can hit at any time. Having a Power of Attorney ensures your financial and medical decisions will be carried out your way when the unexpected happens.
Give Power of Attorney to a Trusted Person
Carefully choose the person you want to represent you so they will serve in your best interest, respect your wishes, and won’t abuse the powers you granted.