A Power of Attorney Form allows a person, referred to as the “Principal”, to be able to choose someone else, referred to as the “Agent” or “Attorney-in-Fact”, to be able to handle financial or medical tasks on their behalf. The most common type is the ‘Durable’ version which allows the Principal to choose an Agent to help them with their financial and business related tasks even if they should become incapacitated.
What is a Power of Attorney?
A power of attorney (POA) is a document you fill out describing what type of power you wish to grant to another person (agent). You may wish to grant another person multiple powers (broad) giving them the ability to act on anything that you could do for yourself (which is known as a General Power of Attorney) or only handpicking powers which would give your agent limited powers (known as a Specific or Limited Power of Attorney). Selecting an agent is important. Your agent should be someone whom you can trust and that is reliable, relatives and close friends usually suffice. When creating your power of attorney, you can elect to have your agent be effective immediately, at a specific date, or when you become disabled. You could also add a clause stating that your agent’s appointment will be revoked upon your incapacity.
Naming your agent is very important seeing as your agent will have the power to do all the things you can do without any supervision (from the courts). There is no oversight especially if the power of attorney used is durable and you become incapacitated, therefore not even you can oversee what your agent does on your behalf. Based on what powers you give, your agent could possibly sell your house, withdraw money from your accounts or place you in unfavorable housing. Your agent must have a very clear understanding where you stand on all issues including your finances and medical wishes.
There are many reasons as to why someone uses a power of attorney. It may be because you need your assistant to access your bank accounts, have someone look out for your needs while your out of town, or in the case you need someone to look after your medical decisions, either way, a power of attorney is put in place so that another person can look after you based on what they know about you.
Types of Power of Attorney
Durable Power of Attorney – Durable power of attorney specifically states that the agent has the legal right to continue to act on behalf of the grantor in the event of the grantor’s physical or mental incapacitation, including death. Durable power of attorney often goes hand-in-hand with healthcare power of attorney, and financial power of attorney.
Grantors may transfer a number of powers through POA documents to their agents, including:
- Financial: this means the agent can act as proxy for investments, leases, loans, business, banking, safe deposit boxes, and tax forms.
- Legal: the agent can represent the grantor in any lawsuits or legal matters.
- Medical: in durable powers of attorney, the agent may make medical decisions, such as continuation of life support or DNR orders, on behalf of the grantor.
General Power of Attorney – This document will let you give your agent the most broad powers. It can be used in many ways since the powers you can assign your agent are endless. It’s mostly used for personal and financial affairs that you would normally be able to perform but for some reason or another, you are not able to. Depending on which state you are located, a general POA may cover medical issues when the Principal is incapacitated.
Common uses for a General Power of Attorney include allowing your agent to:
- Make donations or gifts to family, friends, or charitable organizations
- Manage bank accounts, transactions (including the power to make deposits and withdrawals), investments, and other related financial matters
- Take care of taxes with regards to the IRS and negotiating unsettled debt.
- Create or enter into business contracts and agreements while also having the power to terminate current deals.
Medical (Health Care) Power of Attorney – Healthcare powers of attorney – often also called medical powers of attorney – give the agent legal powers to make specific healthcare decisions on behalf of the grantor in the event that the grantor is sick, dying, or medically incapacitated.
Special (Limited) Power of Attorney – If you are considering naming a power of attorney, you can actually specify different areas for your agent to control. This is called specialized power of attorney, and is referred to as limited power of attorney in some states. In specialized power of attorney documents, the grantor can clearly state very specific powers for the agent, which the agent may not act outside of.
Revocation of Power of Attorney – Power of attorney documents do not officially expire until or unless you issue a revocation, so it is important to issue this legal statement in writing and send copies to any institution that might have a copy of your original power of attorney paperwork – your doctor, your bank, your attorney, etc.