A power of attorney is a legal document in which you give a trusted individual (or individuals) the authority to manage your affairs if you are not able to look after matters on your own. It is a document that allows you to appoint another individual to manage your health, property, and financial affairs. It can go into effect immediately or later when you become incapacitated and can no longer make decisions regarding your own affairs. The main purpose of a power of attorney is to appoint someone to make decisions, sign documents, and carry out other important acts when you are not able to do so yourself.
Types of Power of Attorney
General Power of Attorney
A general power of attorney is one that allows the agent you have to chosen to conduct virtually every type of business or financial transaction without any restraints.
Special or Limited Power of Attorney
A special or limited power of attorney is one that allows the agent you have chosen to perform only specific acts, such as completing the sale or purchase of real estate.
Springing Power of Attorney
A springing power of attorney is one that goes into effect (or springs into action) at some point in the future following the occurrence of a triggering event. The triggering event can be when the principal reaches a certain age, or when the doctor certifies that the principal has become incapacitated and is no longer able to make decisions for themselves.
Durable Power of Attorney
There are 2 types of durable power of attorney:
Continuing Power of Attorney for Property
This type of durable power of attorney deals strictly with financial matters and allows another person to manage your finances, including any property and bank accounts. Decisions regarding investments, making tax returns, claiming and dealing with benefits, and settling any liabilities become the responsibility of the person named in the document. This provides you with a peace of mind, knowing that your financial affairs will be well taken care of if you become incapacitated and are no longer able to make those decisions yourself.
Power of Attorney for Personal Care
This type of durable power of attorney allows an individual to make decisions related to your medical care, where you should live, social activities and decisions regarding life-saving procedures. This type of document is only enacted after a doctor has determined that you are no longer able to make these decisions for yourself. Putting a power of attorney for personal care into place allows you to choose who you want to make these important decisions on your behalf if you become incapacitated.
Whom You Should Appoint
You should appoint a trusted family member or friend who truly cares about you and your well-being. You want someone you know you can trust to follow through with your wishes. You can use one individual to make all decisions or you can separate the financial and health decisions between two different individuals. An alternative would be to use a trust company to act as your attorney when dealing with property.
What If You Don’t Have a Power of Attorney
If something happens to you that makes you incapable of making your own decisions and you do not have a power of attorney in place then other arrangements will have to be made.
With no power of attorney for property, the Public Guardian and Trustee will become your statutory guardian. There is a process that can allow the guardianship to be moved over to a close family member but it is a long and expensive process.
By signing a power of attorney, you are ensuring that in the event that something does happen to you and you become incapacitated that someone you trust, someone who knows your wishes, will have the power and control to make those important decisions on your behalf.