What Is Power Of Attorney?

Instead of leaving things to the whims of others, choose an agent or attorney-in-fact who can act on your behalf if you become mentally unfit to handle your necessary legal, financial, or personal matters. This can be done by a legal document called a power of attorney, which gives one person the power to act on behalf of another. Things happen, so it is best to set yourself and your family up with a straightforward way to care for you if things get tough.

Types Of Power of Attorney (POA)

General POA

This POA grants power to the agent in all financial and health matters on behalf of the principal or grantor of the power of attorney, allowed by state law. This can include signing checks and handling bank accounts, selling property and managing assets, and filing taxes.

Special POA

A special POA is limited and only lists specific powers for the agent. It is usually done for a limited amount of time and lists what specific actions, usually financial matters, the agent has the power to take.

Durable POA

Once the duties are fulfilled by a normal power of attorney that legal power ends - unless there is a durability clause. This means the power of attorney is extended even when the grantor is incapacitated and needs the agent to make financial and medical decisions.

Springing POA

A Durable POA continues an existing power of attorney agreement when the grantor becomes incapacitated. The Springing POA is the opposite. It does not take effect and grant the agent power over the grantor’s financial and medical matters until they are incapacitated.

How To Implement A Power of Attorney

There are different rules and laws to follow per state, but the guidelines and steps to complete a power of attorney are similar.

  1. Spell out your terms. While some states will acknowledge a verbal agreement, it’s always best to put it in writing. If there is someone who you want as your agent, talk with them and write them down.
  2. Follow proper format. With the internet, there are many resources available to us. If you type into a search engine, like Google, your state’s power of attorney form, you can usually find one that is worthwhile.
  3. Delegate powers. It’s up to you to determine how much power you are willing to grant to an agent. It can be broad or limited; it just needs to be clear. You can’t just make a grand general statement.
  4. Specify durability. When do you want this to take effect and for how long? If you become incapacitated, most states revoke power of attorney privileges. To have the power of attorney continue in these circumstances, you need to have it written.
  5. Notarize it. In most states, a power of attorney document needs to be notarized. Note: Some financial institutions provide this service free of charge.
  6. File it. It’s best to file this document with a government office or court to make it effective.

Choosing An Agent

Whoever you grant this power, keep in mind they will have immense ownership, authority, and responsibility over you and your assets. It’s critical to choose someone who will handle you and your estate with care and ensure your wishes are carried out.