If you have ever wondered what a power of attorney means but were afraid to ask, don’t worry, you’re not alone. The term “power of attorney” can be quite confusing since its definition varies depending on whom you ask.
But in general, a power of attorney (POA) is a document that allows one person to act on behalf of another person in various situations. There are different types of power of attorney, depending on the situation you need it.
Of course, if you don’t know when and who to choose as your POA, you can always consult with wills and estate attorneys who can tailor the POA to fit your specific needs. That said, let’s look at some of the most common types of POA.
General Power of Attorney
A general power of attorney is more broad, giving the agent authority to act on behalf of the principal in all matters. The agent can decide the principal’s health, welfare, and finances. The agent can pay bills, access bank accounts, and sell property on the principal’s behalf. The general POA ends when the principal dies or becomes incapacitated.
You can get a general POA when you are still able to make your own decisions but want someone you trust to be able to take care of things for you if you can’t. For example, if you are going on a trip and won’t be able to take care of your finances or if you are getting older and want someone to help you with your affairs.
Limited Power of Attorney
The limited power of attorney is tailored for specific events or circumstances where the agent is authorized to act on behalf of the principal. It may be effective for a particular period or until a specific event occurs since it doesn’t give the agent general authority to act in all matters.
For example, suppose the principal will be out of the country for an extended time. In this case, they may give a limited POA to another person authorizing them to act on their behalf regarding financial affairs. However, the limited POA would not give the agent authority to decide the principal’s health or welfare.
Durable Power of Attorney
The durable power of attorney (DPOA) is the most common type of POA. As the name suggests, a DPOA is a legal document that remains in effect even after the person who filed it becomes mentally incapacitated. This means that the designated durable agent can continue to make decisions on behalf of the incapacitated principal regarding property, finances, and other legal matters specified in the agreement.
1. Financial Power of Attorney
This type of DPOA allows the agent to make financial decisions for the person who granted the authority. This includes managing your bank accounts, paying your bills, and investing your money. The financial POA is considered a special or limited POA because it is specific to financial matters.
Of course, you can also give your agent general authority to make decisions on your behalf, but it’s generally recommended that you limit the POA to specific financial matters. That way, your agent doesn’t have the authority to make decisions about your health or welfare, leading to problems down the line.
Suppose something goes wrong with the financial decisions that your agent is making. In that case, it will be easier to prove that they were in error since they were acting specifically under the authority granted to them in the POA document.
2. Medical Power of Attorney
This type of DPOA allows the agent to make medical decisions for the person who granted them authority. Suppose you become incapacitated and can’t make decisions about your own medical care. Your agent would then be able to make decisions on your behalf, such as whether to undergo surgery or choose a specific type of treatment.
The medical POA is also special or limited because it is specific to medical decisions. You can give your agent general authority to make decisions on your behalf, but it’s generally recommended that you limit the POA to specific medical decisions.
Suppose something goes wrong with the medical decisions that your agent is making. In that case, it will be easier to prove that they were in error since they were acting specifically under the authority granted to them in the POA document.
As you can see, there are a variety of situations in which you might need a power of attorney. It is essential to understand the different types of POA to choose the right one for you. So, what type of POA is right for you? Talk to a legal professional to find out.