Acceptance is the first step towards preparing for the future. It would be best to accept that life might not always be the same; circumstances change your decisions and path. Hence, it is essential to have provisions to tackle uncertainty. Furthermore, power of attorney is a legal way of temporarily or permanently designating someone to act on your behalf. While the reason for the transfer of rights could be personal or on medical grounds, it minimizes the principal’s effort and time.
This blog highlights the significance of the power of attorney, the power of attorney rights, and power of attorney limitations.
What Is Power of Attorney?
Power of attorney or a POA is a legal authorization where a designated person called an “agent” can act on someone else’s behalf. And the principal is the person on whose behalf the agent acts. Moreover, through a power of attorney, the agent can take general, financial, and healthcare decisions if the principal is incapacitated and cannot speak for themself. Also, the principal can benefit from Poa when they are far off and cannot make it to sign the legal documents for an intended purpose.
How does a power of attorney work?
The fundamental purpose of a power of attorney is to act on the designated person’s behalf when the person is incapacitated and can no longer express themselves. Life is uncertain, and often you might not be able to make decisions for yourself due to unavoidable circumstances or health reasons. Given that, you can nominate a power of attorney for urgent situations.
Moreover, without a POA, you must go to a court to appoint a guardian to perform the duties on your behalf. Hence, a POA is an essential provision that saves time and effort.
How to get a power of attorney?
You can get a power of attorney from online websites or lawyers. Furthermore, the POA is an agreement between the parties(agent and the principal). Hence, they both must sign the legal document with a third party as witnesses.
Here are the basic steps to get a power of attorney.
1. Name the agent or proxy
The first step for appointing a power of attorney is to choose an agent to act on your behalf. Furthermore, your agent must be emotionally and intellectually capable of making important decisions for you.
2. Hire a family or probate lawyer
The legal procedures involve a lot of time and years of expertise. Moreover, consulting a family lawyer accelerates the process as they are well-acquainted with the legal proceedings.
3. Sign your documents
After you prepare a power of attorney, then print the document. Signing a POA and its notarization is an essential step. Besides, the POA also requires the signature of witnesses, which requires a physical copy of the document.
4. Send the signed copies to relevant people
Once the physical copies of the POA are ready, you can send them to the relevant people. For example, you can send a copy to the agent. So, the agent can submit the documents to the third-parties or for the essential services.
5. Update the documents in the future
While the situations and preferences may change in the future, you can always revisit your POA and update it when required.
Types of Power of Attorney
There are different powers of attorney, each for a specific purpose.
1. General power of attorney
A general power of attorney designates the agent with a broad range of powers – related to financial, business, legal, and real estate decisions. Since the scope of the Poa is wide, choosing a reliable agent is of utmost importance. Moreover, a general power of attorney is not valid on the principal’s incapacitation or death.
The following are the responsibilities of a general POA:
- Handling bank transactions
- Paying bills
- Acquiring and selling property
- Buy life insurance policies
- Settle claims
- Manage business transactions
2. Durable power of attorney
A durable power of attorney is also a type of financial Poa. As a power of attorney has the word “durable” affixed, it is effective even when the principal is incapacitated. It is also called the enduring power of attorney.
The following are the powers of a durable power of attorney:
- Act on behalf of the principal if incapacitated.
- Make financial and healthcare decisions on behalf of the principal
- Sign legal documents
Furthermore, a durable power of attorney ends on the principal’s death.
3. Medical power of attorney
A medical power of attorney designates an agent to make healthcare decisions on behalf of the principal. Moreover, the medical power of attorney and the living will differ in several aspects.
The following are the responsibilities of a medical power of attorney:
- Decide on doctors or other healthcare providers
- Make arrangements for healthcare facilities (nursing homes, assisted living, rehab care)
- Make decisions related to surgeries, medications, artificial nutrition, and hydration.
- Decisions related to the release of medical records
4. Special power of attorney
The special power of attorney is a well-defined Poa with a limited scope compared to the general power of attorney. Hence, the principal can define a customized set of duties for an intended purpose rather than a broad range of duties.
Moreover, the Poa ends when the agent completes the activity. Similarly, you can make different Poas for agents authorizing each one with different rights. For example, the powers can include:
- Manage bank accounts
- Collect debts from creditors
- Settle claims
- Sell real estate or personal property
Generally, the experts suggest a special Poa when you cannot perform specific duties due to ill health or other personal reasons.
5. Financial power of attorney
A financial Poa transfers certain financial powers to a designated person defined in the attorney document. Moreover, the agent makes the financial decisions on behalf of the principal when they cannot speak for themselves. A financial Poa is also a type of general Poa; hence we include the duties of a general Poa within its scope.
6. Power of attorney for property
A power of attorney for the property includes real estate, bank accounts, bonds, and stocks belonging to the principal. Moreover, the Poa is valid if the principal lives overseas and intends to sell a property but cannot be present during the sale. Also, for the Poa to be authentic, you require the signature of two witnesses.
Power of Attorney Rights
As we know, a general power of attorney sample can make important life decisions – general, financial, and healthcare decisions for the principal.
Here are a few power of attorney rights:
- An agent can make crucial medical decisions, such as diagnostics and starting or stopping treatments on the principal’s behalf.
- They also have the right to start a lawsuit and sign critical legal documents required for the process.
- The agent can make arrangements for home care, residential care, or hospice care.
- They can do business, financial, or investment decisions on the principal’s behalf.
- Moreover, the agent has the right to open bank accounts, operate the account, and sign checks for the principal.
- Also, the agent can choose and hire doctors and caregivers.
- They also have the right to receive different forms of income on the principal’s behalf.
- Besides, they can buy life insurance policies for the principal.
Power of Attorney Limitations
Although a power of attorney has various rights, it also has certain limitations. Beyond the scope of which the agent cannot operate. Moreover, these limitations help to control the actions of a power of attorney.
The following are the power of attorney limitations:
- The POA cannot act outside the outline of the principal’s actions.
- The POA cannot transfer the responsibilities to another agent at any time.
- The POA cannot distribute the assets and inheritance on behalf of the principal.
- The POA cannot make any financial or legal decisions after the principal’s death, as the executor takes it over.
- The POA cannot manipulate or invalidate the Will or other estate planning documents.
- The agent can only act after the power of attorney document comes into effect.
- Moreover, the court allows choosing POA if the principal is of sound body and mind.
- The POA cannot use the principal’s money for their purpose.
- Besides, the POA cannot take compensation above the defined limit outlined in the document.
- In the end, the POA cannot manipulate the terms of the nominating documents for their interest. Under such circumstances, the court will take legal action.
What Can a Financial Power of Attorney Do?
A Financial Power of Attorney appoints an agent to manage the principal’s financial affairs if the principal cannot make decisions and speak for himself.
An agent with an authentic financial power of attorney has the following rights:
- Access the principal’s bank accounts to withdraw money for healthcare, the principal’s day-to-day needs, and paying bills.
- While accessing the bank accounts, the agent can sign checks and add or change beneficiaries.
- Further, the agent can even mail and deposit social security checks.
- Also, the agent can collect the principal’s debts from creditors.
- Make investment decisions on the principal’s behalf.
- File the tax returns on behalf of the principal.
- Besides, the agent can even manage the principal’s estate.
A power of attorney is a valuable instrument for the principal. Moreover, it is a helpful aid when someone is ailing from a serious illness or has encountered an unforeseen event. Further, it helps the principal to secure the estate from third parties or any form of deceit when incapacitated. But along with the rights defined for the Poa, there are specific power of attorney limitations. And the Poa must act within this realm, or it can cause serious trouble.
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