Often abbreviated “POA”, a power of attorney is a document used in estate planning to appoint a person or entity to manage your interests. This agent, by right of the POA has the legal authority to make decisions on your behalf regarding matters outlined in the document.
5 Types of Power of Attorney
There are different types of powers of attorney (POA) that provide varying levels of authority to an appointed person.
The person to whom you give the POA is referred to as your agent. This agent receives the authority to manage your affairs. The amount of power and authority that the agent has is determined by the type of POA used. When the authority shifts to the agent and when it is terminated, also depends on the type of POA.
There are five commonly used POAs:
- Durable Power of Attorney
- Medical Power of Attorney
- General Power of Attorney
- Limited Power of Attorney
- Springing Power of Attorney
Your needs will determine which of these five is right for you. In some cases, a combination of more than one will be needed to cover your needs. It’s important to know exactly what you are signing and the power you are handing over to another before doing so. Let’s explore each one and what it provides.
Durable Power of Attorney
A durable power of attorney (DPOA) grants your agent the ability to act in your place if you become unable to. With a DPOA, if you were involved in an accident and unable to communicate, the designated agent would have the authority, based on this document, to make financial and health decisions for you as well as sign any necessary documents in your name. This POA becomes effective immediately when signed unless designated otherwise and is terminated on your death.
In contrast, a non-durable power of attorney becomes void if you are incapacitated or die. Most POAs can be made durable. Make sure you know from the start which category yours falls under. If your POA is non-durable and you were to fall into a coma, your appointed agent would lose the authority you have given, and the court would then appoint someone to make the decisions on your behalf.
Medical Power of Attorney
A medical power of attorney is also referred to as an advance directive or healthcare surrogate. The purpose of this document is to designate someone who will make medical decisions for you if you are unable to do so.
This document becomes effective immediately on signing but can only be used if you have been declared mentally incompetent by a physician.
The agent then has the power to determine your medical treatment, oversee that your Do Not Resuscitate and Living Will are adhered to, share your medical records, and much more.
General Power of Attorney
A general power of attorney is wide sweeping. It is not specific but rather grants your agent the power to act on your behalf on a broad range of decisions. The agent can pay bills, sign contracts, buy property, and make legal decisions in your name.
This type of POA gives your agent control over your affairs. It is a tool that comes in handy if you are unable to manage your own affairs for a short period of time. Soldiers often grant their spouses or another family member this type of POA during deployment.
A general power of attorney ends with incapacitation unless you have made it durable, or at the moment you die. The rules around the authority granted in a general power of attorney vary state by state.
Limited (Special) Power of Attorney
If you want to give an agent the power to act on your behalf for a specific purpose, and not the broad range that a general power of attorney provides, you need a limited or special power of attorney.
A limited power of attorney grants someone the right to do a specific task, like paying bills or cashing checks, in your name. That same person will not then have the authority to enter into contracts in your name or have access to all of your finances.
Once the specific task is completed or the time designated on the POA expires, the document is void, and the agent can no longer speak in your name. You can create multiple limited POAs and grant multiple agents limited decision making power on your behalf.
Springing Power of Attorney
In a springing power of attorney, also known as a conditional power of attorney, an event that has been specified in the document must occur for it to go into effect. This type of POA begins and ends at a specified time. It also terminates if you are incapacitated or die.
How Do You Know Which Power of Attorneys is Right for You?
There is a wide range of POAs to consider. Consulting with an experienced estate planning attorney can prove a vital tool to properly organizing your estate needs. Give us a call, and we will walk you through the types of powers of attorney and help you select the right one(s) for your estate. Contact us today.