You may travel and spend a lot of time out of the country. You may be aging and often wonder who to entrust with your end-of-life healthcare wishes. If you are a young parent, you may ask this uncanny question: who would take care of your children and aid them in their financial needs if you are not around anymore? Well, these are not uncommon events.
The solution to these commonly ticking questions is to have a power of attorney. From managing your financial affairs to bestowing your future medical care wishes, a legally binding power of attorney helps you with these issues by appointing an agent. This agent works according to your specified instructions and holds the legal authority to carry out decisions on specific matters on your behalf. Let us delve deeper into the definition of POA and its importance.
What is power of attorney?
A power of attorney, often known as a POA, is a legally binding document that grants authority to act on behalf of the trustee to an attorney-in-charge or other legal agent. The attorney in charge has either absolute or restricted power to act on behalf of the Principal. The agent may make choices affecting the person’s property, finances, or medical care.
A general Power of Attorney may grant an agent the right to act on your behalf in the short or long term. Those who are unable to manage their affairs use a POA, typically caused by a disease, a disability, or just being away from home for a more extended period.
Who is an agent?
A POA gives someone else the authority to handle your financial and legal affairs in your stead. Agents or attorney-in-fact are terms used to describe the individual granted this power. It is crucial to appoint a skilled and trustworthy person to act as your agent. Any errors made by your agent may be difficult to remedy because they have the same legal authority you would have.
Most people name their spouse or a close friend as an agent. You may also select an alternative if your primary agent is unavailable. Additionally, you can choose more than one person who can operate jointly or independently, according to your instructions. There are different types of POA, something you must keep in mind while deciding how much authority you want your agent to have.
Types of Power of attorney
Is there a one-size-fits-all power of attorney? The answer would be no. There are numerous types of power of attorney for various purposes. For example, a POA may only be valid for financial affairs, while others, for your healthcare decisions. Below is a list of varied POA and their functions.
General power of attorney
A general power of attorney is detailed and gives your agent a broader authority to act on your behalf. This includes managing all your legal disputes, signing documents, running business duties, and performing any other important tasks you specify. In majority states, a general power of attorney remains effective until the death or incapacitation of the grantor.
A durable power of attorney
A general POA expires upon revocation or at the set expiration date. But what will happen if the grantor becomes incapacitated? A standard power of attorney ends the minute Grantor is incapacitated. A durable power of attorney allows your agent to continue making decisions on your behalf, even if you become incapacitated.
Durable POAs are frequently used to plan for a scenario in which you are physically or mentally incapacitated and unable to make decisions independently. Without having a durable power of attorney, your family might need to go to court before they can take care of your financial and other important affairs.
Financial Power of Attorney
In an estate plan, a financial power of attorney enables you to delegate financial management to someone you trust. If you’re ever incapacitated, pass away, or are otherwise absent and unable to make financial choices, your Financial POA can take care of your financial affairs.
Your financial affairs need to be in order more than ever if you have medical issues. You still need to manage your accounts and pay your bills, such as your rent or mortgage payment and insurance fees. A financial POA will help you in challenging times.
Financial Power of Attorney
In an estate plan, a financial power of attorney enables you to delegate financial management to someone you trust. If you’re ever incapacitated, pass away, or are otherwise absent and unable to make financial choices, your Financial POA can take care of your financial affairs.
Your financial affairs need to be in order more than ever if you have medical issues. You still need to manage your accounts and pay your bills, such as your rent or mortgage payment and insurance fees. A financial POA will help you in challenging times.
Medical Power of Attorney
A medical power of attorney helps you to assign a proxy authorized to make critical medical decisions when you become incapacitated and unable to convey your intentions. It is similar to any other POA but relates specifically to your medical needs.
It includes your end-of-life care and other medical situations where you need the help of life support systems. It is advisable to make a medical POA durable. If you assign an enduring power of attorney for medical issues, your agent continues to make medical decisions on your behalf, even if you become incapacitated.
Limited or Special Power of Attorney
Limited or special powers of attorney are the best options for someone who wants to restrict the agent’s authority. One must specify the extent of power the agent holds in a special POA in great detail. It is essential to consult a legal advisor if you are unsure of what should be covered in the special power of attorney or what aspects need your attention.
Springing power of attorney
A Springing Power of Attorney is a significant legal designation that grants someone the authority to handle another person’s financial or medical affairs, but only under certain conditions. It is a specific power of attorney for property. It is also sometimes referred to as conditional POA.
The Three Main Roles of a Power of Attorney
What does power of attorney allow me to do? You may wonder. Well, as there are different POA, their roles vary according to the Principal’s instructions. Even though their roles differ, the basics remain almost identical. Here are the three significant Power of Attorney roles:
Responsible for managing property, financial and medical affairs
A designated attorney may be required to oversee the grantor’s property and financial affairs and participate actively in its succession planning, depending on the provisions of the POA. Sometimes it grants specific sets of authority to act under certain conditions. A medical POA plays a vital role in the grantor’s future healthcare decisions and end-of-life medical treatments.
Be loyal to the Principal
The attorney is accountable for carrying out the tasks and obligations delegated to him; honestly and takes all legal measures to ensure that it aligns with the Principal’s interests. Agents must not engage in a task they have no authority over.
Prevent Conflict of Interest
One of the significant roles of a POA is to avoid any friction raised due to the grantor’s financial or medical affairs. POA becomes a vital instrument if the grantor is away for a long time or becomes incapacitated. These situations often give rise to unexpected conflicts regarding their properties, end-of-life treatments, and other financial matters. POA often helps prevent such conflicts of interest with legal authority.
How Flexible is a Power of Attorney?
The power of attorney rights and limitations and its flexibility depend on the types of POA and legal instructions provided by the grantor. It also changes due to significant events like the death of a grantor, any breach of the grantor’s instructions, divorce, and many more.
Some people only give a POA the power to make medical choices. However, some principals will only grant financial authority to their agents. Your choice of POA agreement will impact the agent’s duties. There are certain limitations to it as well.
For example, an agent cannot transfer their duties to another agent as they please. POA can not act outside of the authority they are bestowed by the grantor.
How can we create power of attorney?
A power of attorney gives the grantor, Principal, or donor of the power the sole right to delegate decision-making authority for personal, legal, and medical matters to the agent or attorney-in-fact.
Power of Attorney forms are official legal documents with various formats depending on the state you live in. Multiple online sites offer a power of attorney sample templates to help you establish a legally valid document.
Once you have decided on your agent and the type of POA, You must sign these documents and notarize them in most states. Some states might call for additional witnesses or your agent’s signature. Also, keep updating your POA due to changes in your decisions about your agent or the set of instructions.
Conclusion
Lastly, A power of attorney (POA) is a necessary aspect of your Estate Planning. It will give you peace of mind. You always want your valuable assets and healthcare decisions to be in safe hands if you are not the one in the driving seat. Last but not least, select your agent in your power of attorney carefully. If necessary, discuss the roles and responsibilities with them and understand if they are comfortable with their roles and responsibilities.
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