Most people have a basic understanding of what a Power of Attorney is. This critical legal document allows you to give a friend, family member, or third party the authority to make decisions and take certain actions on your behalf should you become incapacitated or cannot be present to conduct business for yourself.
The POA is a pretty straightforward concept and is utilized by individuals and families every day. But did you know there are different types? Each Power of Attorney is designed to carry out a specific decision or action.
Below are a few examples of POAs and their purpose:
General Power of Attorney
Allows whomever you assign as the Attorney-in-Fact to act on a broad range of matters, such as conducting business transactions, making legal choices, signing checks or other documents on your behalf, and paying bills. A general POA is only valid until you become incapacitated. It is useful so that you always have someone to help shoulder the load of important decisions as you age. It is not meant to handle a variety of end-of-life decisions.
Durable Power of Attorney
This Power of Attorney is identical to the purpose and scope of a standard Power of Attorney, except that it has specific language within the document that allows your agent or Attorney-in-Fact to maintain powers even after you become incapacitated and are unable to handle matters on your own.
Limited or Special Power of Attorney
Allows only for very specific actions or decisions to be made on your behalf. So, rather than broad reaching, the agent can only conduct certain actions for a limited period of time. An example would be that the agent would only be able to act on behalf of the principal while they are out of the country for three years.
Medical Power of Attorney
A Medical Power of Attorney allows you to choose who you want to be in charge of making healthcare decisions if you become incapacitated, such as medical treatment, tests, surgeries, transportation, etc. This POA does not take effect until the day you are considered legally incapacitated. In the event that you pass away, the Medical POA is no longer valid.
Financial Power of Attorney
This POA gives someone the authority to manage financial decisions such as accessing bank and investment account information, paying bills, transferring and selling assets, and purchasing insurance on your behalf. Having this document in place can really help your family in a time of crisis. Similar to a medical POA, a financial POA does not take effect until the day you are incapacitated. The document is no longer valid when you die.
Springing Power of Attorney
A springing POA is by nature the same as a durable Power of Attorney. It only grants authority to an agent or Attorney-in-Fact when you become disabled or incapacitated.
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