Generally speaking, a Power of Attorney is exactly what the name suggests. This is a document that gives someone the power to act with authority over your affairs. They are good to have for a variety of life situations, and that’s why there are a variety of ways to set them up. All told there are 4 different types of Power of Attorney designation, and each serves a unique function.
When you create a Power of Attorney, you are appointing an “Attorney in fact”, or an Agent, to handle your financial (and sometimes other) affairs in the event that you cannot. Powers of Attorney can be drafted for certain specific transactions or more general matters. They can be effective immediately or they can be triggered by a certain event, like a sudden lack of competency. If the Power of Attorney is triggered by lack of competency, a doctor’s opinion is often needed before the Power of Attorney becomes effective.
With a Limited Power of Attorney, someone else has the power to act on your behalf for a very limited purpose. A Limited Power of Attorney is something you might use to give a person the right to sign legal documents on your behalf when you can’t be physically present. It often has an expiration associated with it, like right after the documents are signed.
A General Power of Attorney gives your appointee all the rights you have. This could be used in the event that a person becomes incapacitated, but they are also used by people who need someone to help with their affairs. This type of power of attorney expires upon death, if it’s not revoked beforehand.
Durable Power of Attorney is what most people want in their care planning files. The scope can be broadened or narrowed, but it remains in effect if a person becomes incapacitated. This part is key. Without a durable power of attorney in place, there is no one to represent you or your estate. The court may appoint a conservator or guardian, but this process is all about controlling your legacy, and the right documents in place will make that a reality.
The last type of power of attorney is known as a Springing Power of Attorney. This one goes into effect in the event that you are incapacitated. The reason for (and definition of) “incapacitation” is very clearly spelled out in this type of document.
As with all legal agreements and estate planning documents, the associates you choose are everything. Whoever your power of attorney is, you should trust them implicitly. They should have your best interests in mind. You should trust them with your life, because one day you truly might have to.