Many people have heard the term ‘power of attorney’ but have questions about when it is needed, and under what circumstances. A power of attorney (POA) grants a family member or other trusted individual the ability to make financial or healthcare decisions for you as your ‘agent’. This responsibility can be as broad or narrow as you wish to make it, and the POA will contain all of the specifics.
Often, a POA can be in place immediately or be triggered when you become incapacitated through illness or injury, but it could also be used if you are traveling out of the country and need to have your affairs handled if you are unavailable.
While incapacity may seem like a remote possibility for healthy adults, there is always the risk that you are unable to make decisions, even for a short time. The POA is a wise planning tool for those who want to decide who will step in to make financial and health care decisions, especially for significant financial or business interests, young children or other responsibilities.
What are the Different Types of POAs?
There are different types of POAs that can be used depending on your circumstances and how long it could be in effect, and your estate planning attorney can tell you which might be most suitable.
General POA – General POAs can cover the full range of personal or legal responsibilities, and can include buying and selling property, filing tax returns or handling banking transactions.
Limited POA – A limited POA is just that, restricted to a specific area or decision, such as a single financial transaction or to manage business interests for a short period of time.
Healthcare POA – This may be most well-known POA. The POA gives the agent the duty to make medical decisions on your behalf if you are unable or unconscious, according to the specific medical care directives of your living will.
Durable POA – Durable POAs are still in effect if you are incapacitated. The ‘durable’ aspect of this POA means that if you are unable to act on your own behalf, your agent can make decisions regarding your medical care or other personal and financial matters, depending on how you drafted the POA.