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What Is a Power of Attorney (POA)?


Introduction: Power of Attorney

A power of attorney, often known as a POA, is a legal document that allows you to delegate authority to another person to make financial and/or medical decisions on your behalf. This individual is referred to as your agent, proxy, or attorney-in-fact. Most POAs are put up to be used in the event that you become disabled and are unable to convey your wishes or act for yourself. Simply put, a POA authorizes your agent to manage your affairs if you are unable to do so. In the event of a principal’s temporary or permanent illness or disability, or when the principal is unable to sign appropriate documents, power of attorney is routinely employed.

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A power of attorney can expire for a variety of reasons, including the principal's revocation or death, the court's invalidation of the agreement, or the agent's inability to carry out the defined tasks. If the principal and the agent divorce, the authorization may be void. There are several different kinds of powers of attorney. When a "durable" power of attorney is signed, it takes effect immediately, but a "springing" power of attorney takes effect only if and when the principal becomes incompetent. A medical power of attorney can also be limited, allowing the agent to make important decisions on behalf of an incapacitated person. As long as the principal’s mental state is good, most powers of attorney instruments allow an agent to represent the principal in all property and financial concerns.

The agreement would automatically cease if the principal became unable to make decisions for themselves. Anyone planning for unforeseen incapacitation or long-term care, no matter how remote such occurrences appear to be, should consider a power of attorney for use in case of necessity. It may also be required for someone who expects to be away from home and difficult to contact for an extended period of time. A general or limited power of attorney can be used.

Read Our Blog: Download Power of Attorney Format

What is the Requirement for Power of Attorney?

Unexpectedly, anyone can get extremely ill or injured. If this happens to you, managing your daily concerns, such as paying bills and accepting (or denying) medical treatment, may become challenging. Your loved ones will have to approach the court for permission to act on your behalf if you don't have a POA. This can be time-consuming and stressful. And occasionally the person appointed by the court is unaware of your desires or is not the person you would have picked. Some people are hesitant to prepare for a situation when they will require a power of attorney. However, by preparing ahead and being prepared, you can be assured that your medical and financial requests will be carried out by someone you absolutely trust. Knowing what you want can also be a relief for your loved ones, giving them the confidence to make vital decisions.

You can plan ahead and ensure that someone you trust can act on your behalf when you can't by establishing a POA before you need it.

Types of Power of Attorney

General Power of Attorney

A general power of attorney allows your agent to act on your behalf in any scenario where local law permits, such as legal, financial, health, and business problems. Although a general POA gives your agent significant decision-making authority over your affairs, there are several things they can't do. They can't, for example, marry you or make changes to your last will and testament on your behalf.

Special or Limited Power of Attorney

A special, specific, or limited power of attorney is a legal document signed by the principal authorizing an agent to act on his behalf in specific ways. An agent may, for example, be authorized to do specific business-related duties, such as closing or operating business accounts.

When a power of attorney is limited to specify obligations, it becomes a special power of attorney. The document will outline the specific tasks and obligations that the agent will be responsible for for the principal.

Two types of limited POAs commonly used in estate planning are:

  • Financial power of attorney: This POA empowers your agent to make financial and property decisions on your behalf. Your agent might, for example, pay your bills, make bank payments, collect your retirement benefits, and sell or rent your home.
  • Medical power of attorney: A medical POA (also known as a healthcare POA) authorizes your agent to make medical decisions on your behalf. These choices could include things like treatment, medicine, surgery, end-of-life care, and more. Your loved ones may be left guessing what kind of treatment you want if you don't have a medical POA. It's also possible that you'll be treated differently than you would have preferred.

Springing Power of Attorney

A typical POA becomes effective immediately after you sign it, and your agent can immediately begin executing the powers you gave them. A springing POA, on the other hand, only allows your agent to act if certain conditions are met, such as if you've become incompetent and can't act for yourself. Your agent's power "springs" into action if the requirement is met. Until then, your agent has no legal authority over your affairs, and you are the only one in charge. Most lawyers advise against utilizing springing POAs for estate planning. This is because establishing whether or not you are incapacitated is not always simple. These concerns are avoided with a non-springing POA, and you can tell your agent to use their powers only if you are disabled.

Durable Power of Attorney

Your POA has control over when your agent's abilities are activated and when they are deactivated. If you have a durable power of attorney, your agent will be able to act on your behalf even if you become incapacitated. Because you're planning for a circumstance when you won't be able to make decisions on your own, it's common for your POA to be durable.

If you become incapacitated, your agent's authority to act ceases with a non-durable POA. Non-durable POAs aren't ideal for estate planning, but they can come in handy in other situations. You might give your stockbroker a non-durable POA so that they can manage your investments on a daily basis.

If I Have A General POA, Do I Need To Create A Financial Or Medical POA?

The laws in your state will determine this. In some areas, a general POA can cover both financial and medical choices, eliminating the need for additional documents to be created and managed. Other states demand that healthcare decision-making authority be granted in a separate medical POA. Make sure to check your state's legislation to learn about the POA requirements in your area.

Regardless, you'll need to construct both a financial and a medical POA if you want one agent to handle your financial matters and another to handle your medical decisions.

If I have a will, do I need a POA?

Yes, experts believe that you should have both a will and a power of attorney. They achieve different goals. Your last will and testament specify how you want your belongings dispersed after you pass away. In the event that you become ill or injured, your POA covers essential decisions that must be made during your lifetime.

Procedure to Make a Power of Attorney

Here are the basic steps to make your power of attorney:

  • Choose the type of power of attorney you'll use. Your situation and tastes will determine the best fit for you.
  • Choose who you want to represent you. Because your agent will have a lot of power, find someone you can trust to work in your best interests. It's a good idea to chat with this person ahead of time to confirm their willingness to act as your agent.
  • Determine how much power you want to give your agent. What financial and medical decisions do you want them to be in charge of on your behalf?
  • Obtain a power of attorney document. Although most states give free blank POA forms, they aren't always easy to customize to your specific needs. You can also construct a durable financial power of attorney or a living will use free internet tools (which includes a healthcare power of attorney).
  • Fill out the form, sign it, and have it witnessed according to your state's laws. You must sign your POA paperwork in front of a notary in most states. Some states require additional witnesses or your agent's signature.
  • Give your agent and other interested parties, such as your bank and medical office, a copy of your POA form.
  • Store your POA forms with your other estate planning documents in a secure location. This could be in a fireproof safe at home, a safe deposit box, or in the office of a reputable attorney.
  • As your circumstances change, update your POA.

You aren’t required to use a lawyer to create your POA. However, you may find it useful to consult with one to make sure your POA covers all your needs.

Who Can Act as Power of Attorney?

The only criteria for a POA agent in most states are that they are of sound mind and at least 18 years old. Because your POA has a lot of power, you should choose someone who is competent and trustworthy and who has your best interests at heart.

When Does Power of Attorney End?

This will depend on the type of POA you have created.

  • If you have a non-durable power of attorney, your agent's powers will expire if you become incompetent.
  • If you have a durable power of attorney, your agent's authority ends when you die. The executor of your probate estate is given authority to manage your estate's affairs and assets at this stage. (You can name an executor in your will)
  • If you revoke your POA, it will likewise expire. As long as you're of sound mind, you have the right to cancel your POA at any moment. This should be done in writing. Your agent's authority is terminated when you revoke your POA.
  • Your agent could also resign, robbing you of the authority you gave them under your POA. Unless your POA expressly indicates otherwise, if your spouse is your agent, their authority will expire if either of you files for divorce or legal separation.

How to Change or Revoke a Power of Attorney

You can revoke your power of attorney at any time, as long as you’re mentally capable of doing so. To revoke your POA, either:

  • Just like a power of attorney, fill out revocation of power of attorney form and have it witnessed and notarized. This paper expresses your desire for your chosen agent to no longer serve as your POA.
  • Make a new power of attorney document that expressly indicates that you’re the previous POA is revoked. You can then utilize your new POA to appoint a new agent or modify the obligations of your present agent.

You should notify your original agent in writing that you're canceling their power of attorney once you've completed either of this paperwork. You should also notify any third parties who have your POA on file, such as banks and medical agencies, of the revocation. You should also give a copy of the revocation to any agencies where your POA is on file, such as the county clerk's office.

Powers of attorney cannot be changed or "edited." You should prepare a new POA document and cancel the old one if you want to make modifications.

Who Can Override a Power of Attorney?

You can always override your own POA by canceling it if you're of sound mind. Furthermore, if you believe your agent is exploiting you, others close to you, such as family, may try to overrule your POA. They may believe, for example, that your agent is not acting in your best interests.

If you were of sound mind, your loved ones would first raise their worries to you and ask you to remove your agent. If you become incapacitated, your loved ones will approach your agent and request that they stand down as your POA. If your agent refuses, your loved ones may have to take the matter to court, most likely with the assistance of a lawyer. They'd have to show that your agent wasn't operating in your best interests or following your POA's directions.

It's always a good idea to employ a lawyer to help in overriding the power of attorney for a disabled person because it's a tough process.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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