A power of attorney is a legal document where an “agent” or “attorney-in-fact” is appointed to act on behalf of the creator or the “principal” of the power of attorney in certain situations. In the event that you or a loved one become incapacitated and no longer able to make financial and other important decisions than you or your family may be subject to a long and expensive legal proceeding where the court appoints a guardian or a conservator to make those decisions on behalf of the incapacitated individual.
Creating a power of attorney while your still healthy and able to make important decisions allows you to appoint someone you trust to make decisions on your behalf. You can also decide how much power your agent will have and under what circumstances the power of attorney will come into effect.
The different types of Power of Attorneys are:
General Power of Attorney: A General power of Attorney will provide a wide range of powers to your agent. They can make a variety of legal and financial decisions on your behalf.
Durable Power of Attorney: A Durable Power of Attorney grants all the same powers to the agent as a general power of attorney. The Durable Power of Attorney allows the agent to retain the powers granted to them through the power of attorney in the event that you or your loved one becomes incapacitated.
Limited Power of Attorney: A Limited Power of Attorney allows the principal to limit the specific powers of the agent. They can allow their agent to have the authority to carry out a single function or transaction and they can have multiple limited powers of attorney assigning different agents to carry out different transactions.
Springing Power of Attorney: A Springing Power of Attorney comes into effect under certain circumstances which are specified within the document such as mental or physical incapacity.
Health Care Power of Attorney: A Health Care Power of Attorney comes into effect when you are unable because of mental or physical incapacity to make medical decisions for yourself.