A power of attorney is a legal document in which a person (the principal) designates and authorizes another person (the agent or attorney-in-fact) to transact business or make certain decisions on his or her behalf.
When a power of attorney is in effect, the agent essentially steps into the shoes of the principal and makes decisions that are legally binding on the principal. Powers of attorney can grant a broad, general authority (known as a general power of attorney) or they can limit the attorney-in-fact’s power to act on behalf of the principal to particular situations (known as a special power of attorney). Because there are many different types of powers of attorney available to address a variety of situations, powers of attorney are extremely useful estate planning tools. If you are interested in drafting a power of attorney, contact me to schedule a consultation to discuss which may be the best fit for you.
Different types of Powers of Attorney can include:
Powers of Attorney: Durable vs. Springing
A springing power of attorney becomes effective at the time of the principal’s incapacity. On the hand, a durable power of attorney becomes effective immediately without requiring the principal’s incapacity. This is a major difference, which should be thoroughly discussed with any principal prior to executing a power of attorney.
Powers of Attorney for Medical Care also known as Health Care Proxy
A power of attorney for health care (also called a medical directive, an advance directive, or a durable power of attorney for health care, and health care proxy) allows a person to grant another person the authority to make health care decisions on his or her behalf while he or she is unconscious or if he or she becomes mentally incompetent or otherwise incapacitated.
Limited Powers of Attorney for Financial or Property Transactions
A power of attorney can also be used by a person to grant another person the limited authority to manage his or her finances, buy or sell property, file tax returns, or handle other legal transactions on his or her behalf. However, there are a few powers that a person may not typically delegate to his or her agent.