What is a Power of Attorney (POA)?
A Power of Attorney is a legal document in which the legal authority can be given to another to act on your behalf. This is typically used when you are unable or unavailable to take care of your affairs. If you are giving the authority for someone to act on your behalf, then you are the “Principal”. If you are being given the authority to act on someone’s behalf, then you are considered the “Agent” or “Attorney-in-Fact”. The agent or attorney-in-fact does not have to be an attorney.
There are certain types of power of attorney. Typically, a power of attorney can be general or specific. A general power of attorney gives broad powers to manage your affairs. A specific power of attorney gives specific or limited powers. Some of the specific powers listed in many power of attorney forms are: banking transactions, insurance transactions, real estate transactions, powers involving clams and litigation and tax matters.
There is also a “durable” power of attorney. This type of power of attorney is only permissible in some states. A durable power of attorney remains effective even if the principal becomes mentally incompetent or incapable of handling any of their affairs.
Some states allow for a “springing” power of attorney. A springing power of attorney only becomes effective upon a disability.
There is also something called a “health care” power of attorney. A health care power of attorney give the authority to make medical decisions when you are unable to.
When considering a power of attorney it is important for you to understand what your needs are. You need to determine if you are looking to allow your agent to have broad powers covering all types of transactions or only to have your agent act in specific situations.
Choosing an agent will be one of the most difficult decisions during this process. Trust and reliability will just two of the attributes to look for when choosing an agent.
A power of attorney does not need to be permanent. A power of attorney can be revoked at any time. If you change your mind or become uncomfortable with your decision, then you may revoke the power of attorney. Any revocation should be done in writing and should be sent to the agent you appointed in the original power of attorney.
A power of attorney does not survive the death of the principal. If the principal passes away, then probate of administration proceedings need to be commenced to deal with the affairs of the deceased.
As with preparing any legal document, you consult an attorney to ensure that your wishes are being implemented properly.
If you still have questions, call us at 800-403-6191 and we will be happy to help.