Types of Power of Attorney
Full Answer
A power of attorney gives one or more persons the power to act on your behalf as your agent. The power may be limited to a particular activity, such as closing the sale of your home, or be general in its application. The power may give temporary or …
Nov 25, 2003 · A power of attorney (POA) is a legal document giving one person (the agent or attorney-in-fact) the power to act for another person, the principal. The agent can have broad legal authority or...
A power of attorney (POA) is a simple document that gives someone you trust the power to act on your behalf. The person you allow to step into your shoes is called an "attorney-in-fact"—or "agent," in some states.
Sep 02, 2020 · Power of attorney is a legal document authorizing someone to make decisions on your behalf. Here's how to create the document and what to include. Menu burger Close thin Facebook Twitter Google plus Linked in Reddit Email arrow-right-sm arrow-right Loading Home Buying Calculators How Much House Can I Afford? Mortgage Calculator Rent vs Buy
Generally, the law of the state in which you reside at the time you sign a power of attorney will govern the powers and actions of your agent under that document.
A power of attorney allows you to choose who will act for you and defines his or her authority and its limits, if any.
If you are ever called upon to take action as someone’s agent, you should consult with an attorney about actions you can and cannot take and whether there are any precautionary steps you should take to minimize the likelihood of someone challenging your actions.
Today, most states permit a "durable" power of attorney that remains valid once signed until you die or revoke the document.
Another important reason to use power of attorney is to prepare for situations when you may not be able to act on your own behalf due to absence or incapacity. Such a disability may be temporary, for example, due to travel, accident, or illness, or it may be permanent.
There are no special qualifications necessary for someone to act as an attorney-in-fact except that the person must not be a minor or otherwise incapacitated. The best choice is someone you trust. Integrity, not financial acumen, is often the most important trait of a potential agent.
The power may take effect immediately, or only upon the occurrence of a future event, usually a determination that you are unable to act for yourself due to mental or physical disability. The latter is called a "springing" power of attorney.
A power of attorney should be considered when planning for long-term care. There are different types of POAs that fall under either a general power of attorney or limited power of attorney . A general power of attorney acts on behalf of the principal in any and all matters, as allowed by the state.
A better way to start the process of establishing a power of attorney is by locating an attorney who specializes in family law in your state. If attorney's fees are more than you can afford, legal services offices staffed with credentialed attorneys exist in virtually every part of the United States.
A “durable” POA remains in force to enable the agent to manage the creator’s affairs, and a “springing” POA comes into effect only if and when the creator of the POA becomes incapacitated. A medical or healthcare POA enables an agent to make medical decisions on behalf of an incapacitated person.
Ask parents to create POAs for the sake of everyone in the family—including the children and grandchildren— who may be harmed by the complications and costs that result if a parent is incapacitated without a durable POA in place to manage the parent’s affairs.
A power of attorney can end for a number of reasons, such as when the principal dies, the principal revokes it, a court invalidates it, the principal divorces their spouse, who happens to be the agent, or the agent can no longer carry out the outlined responsibilities. Conventional POAs lapse when the creator becomes incapacitated.
The term for the person granting the POA is the "principal." The individual who receives the power of attorney is called either the "agent" or the "attorney-in-fact." Check whether your state requires that you use specific terminology.
A limited power of attorney gives the agent the power to act on behalf of the principal in specific matters or events. For example, the limited POA may explicitly state that the agent is only allowed to manage the principal's retirement accounts.
A power of attorney (POA) is a simple document that gives someone you trust the power to act on your behalf. The person you allow to step into your shoes is called an "attorney-in-fact"—or "agent," in some states.
Power of attorneys can address a variety of situations. You can create a POA for a single transaction (for example, authorizing your brother to sell your car for you while you're out of town) or a long-term, "durable" one that will allow someone to handle your financial or health matters if you ever become incapacitated.
For a financial power of attorney, usually any competent adult can serve as your agent. This person need not be a financial expert, but certainly you'll want to choose someone who has a good dose of common sense, and whom you trust completely. In addition, consider these factors:
You can make your own power of attorney, but your document needs to be valid in your particular state because each state has its own set of requirements. The good news is that state-specific power of attorney forms are readily available, either from your state government or through guided software programs such as Nolo's Willmaker.
If you made a durable financial power of attorney (the most common POAs made as part of an estate plan), the document usually goes into effect immediately after you've signed it and had it witnessed or notarized. In practice, of course, you can instruct your agent not to use the POA until you are incapacitated.
You can nudge or help your loved ones to create their own POA; people often find themselves helping their elderly parents with these documents. Be aware that the person you're helping must have the mental capacity to understand generally what the POA is and what it does. See Helping an Elder Make a Power of Attorney for a more in-depth discussion.
General power of attorney can also include insurance decisions and investment decisions, including those regarding your 401(k)or IRA. Special power of attorney: This gives specific authority to the agent.
The key to making a POA work is finding the right agent to make decisions on your behalf. Your choice may depend on which type of POA you are signing. For a POA related to business, for example, you probably want to find someone with business experience. For legal matters, an attorney may make sense.
Creating your own POA is not difficult. Here are the steps you’ll need to take: Determine which type you need and choose your agent , which we discuss in more detail below. Buy or download the proper form. The form will depend on the state you are in, so make sure you are getting the correct one.
They can handle business transactions, settle claims or operate your business.
The person who is giving his or her power is known as the principal, the grantor or the donor. The person taking on the power is known as the agent or the attorney-in-fact. The grantor can choose which rights to give the agent.
It can never be invoked after your death. You can limit the power in scope or to a certain timeframe or event (such as your becoming incapacitated). You can also revoke it. Whether you’re planning your estateor simply planning ahead, here’s what you need to know when giving or assuming POA.
The Bottom Line. A power of attorney is a legal document that passes a person’s decision-making power to another person, known as an agent.
A power of attorney allows someone else to handle your legal, financial, or medical matters. General powers of attorney cover a wide range of transactions, while limited powers of attorney cover only specific situations, such as authorizing a car dealer to register your new vehicle for you.
When power of attorney is made durable, it remains intact if you cannot make decisions for yourself. A power of attorney (POA) authorizes someone else to handle certain matters, such as finances or health care, on your behalf. If a power of attorney is durable, it remains in effect if you become incapacitated, such as due to illness or an accident. ...
Durable powers of attorney help you plan for medical emergencies and declines in mental functioning and can ensure that your finances are taken care of. Having these documents in place helps eliminate confusion and uncertainty when family members have to make tough medical decisions.
The purpose of a durable POA is to plan for medical emergencies, cognitive decline later in life, or other situations where you're no longer capable of making decisions.
An attorney-in-fact can handle many types of transactions, including: Buying and selling property. Managing bank accounts, bills, and investments. Filing tax returns. Applying for government benefits. If you become incapacitated and don't have a general durable power of attorney, your family may have to go to court and have you declared incompetent ...
A healthcare power of attorney, on the other hand, names someone to make medical decisions any time you are unable to do it yourself, even if you are expected to make a full recovery.
The POA can take effect immediately or can become effective only if you are incapacitated. The person you appoint is known as your agent, or attorney-in-fact, although the individual or company doesn't have to be a lawyer. An attorney-in-fact can handle many types of transactions, including: Buying and selling property.