A power of attorney is a document that grants a person the legal authority to make decisions about certain aspects of another person’s life. It gives a trusted person of your choosing the right to act as your agent in either highly specific or general decisions, depending on the type of power of attorney durable power or springing power. As reported in Wicked Local’s article “Investors, Plans & Money: Power of attorney,” the person you name does not have to be an attorney, nor does it have to be a spouse.
Each type of power of attorney such as a durable power of attorney works to achieve a slightly different goal. As you work with your estate planning attorney on developing your overall estate plan, you will want to know which type you need and what your state’s requirements are. You will have to be of sound mind, with awareness of what you are signing, when the documents are prepared and signed.
Here’s a look at the basic powers of attorney:
A General Durable Power of Attorney gives the named agent the broadest scope and authority to act and make decisions for another person. The document ideally lists the actions the person wishes them to take. This requires absolute trust, because it gives the agent complete control.
A Limited, Specific or Special Power of Attorney is a document that gives an agent the authority to act on your behalf in a very specific area of your life, task, or within a specified time frame. An example would be if you wanted someone to sell, maintain, or manage property for you.
The Springing Power of Attorney is “triggered” (hence the name) when, and only when, certain conditions are met. That might be a loss of mental capacity, for example. This document also must be very carefully defined, and proof of the condition being met may need to be presented.
A Healthcare Power of Attorney goes by different names depending upon the state. However it is named, this is the legal document that gives the authority to make healthcare decisions, if the person is incapacitated through illness or accident. The person named as your healthcare agent should have a clear understanding of your wishes regarding extreme life-sustaining measures, as well as critical care procedures, like blood transfusions or organ transplants.
There can be problems with powers of attorney. The person named to act as an agent must be entirely trustworthy and reliable. Other issues arise, if the documents are not prepared properly. This is why an experienced estate planning attorney is the best source. Here are some examples of what can go wrong:
Properly prepared, a durable power of attorney can save a tremendous amount of stress, provide the ability to make time-sensitive decisions and allow your wishes to be followed. Speak with your estate planning attorney to determine the type of power of attorney your estate plan needs.
Reference: Wicked Local (April 24, 2019) “Investors, Plans & Money: Power of attorney”
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