When making important decisions related to your health, finances and assets, having a power of attorney, or POA, could make all the difference. Whether you’re making decisions for yourself or for another person in a period of incapacity, having a POA on hand can give you the legal authority to make decisions in the other person’s place. This guide is completely dedicated to the power of attorney, including what it is, the different types, who it applies to, when it’s relevant and any additional provisions you’ll need to know.
What is Power of Attorney?
Put simply, a power of attorney (or POA) is a document providing legal power to an individual (or “agent”) to act on another person’s behalf. Depending on the type of POA, the appointed individual may be allowed to make financial, legal, health care and/or business decisions for another person—or on their own behalf and in the event that the individual is not capable of making such decisions.
Types of Power of Attorney
The type of power of attorney most often used depends on the individual’s needs, but there are four primary types that individuals should be aware of.
General Power of Attorney
General power of attorney (POA) grants the appointed individual the right to make any legal, financial and healthcare decisions on behalf of the issuing individual.
Durable Power of Attorney
Durable power of attorney acts similarly to a general POA, but grants the appointed individual the right to make decisions even if the issuer becomes incapacitated.
Limited Power of Attorney
Limited power of attorney applies to a single transaction or event and grants the appointed individual specific rights and responsibilities for a finite period of time.
Springing Power of Attorney
Springing power of attorney does not become effective until the issuing individual becomes incapacitated or in the event of certain life events the individual has specified.
Who Does Power of Attorney Apply To?
A power of attorney can apply to anyone that has the mental capacity to make decisions. Generally, POAs are issued to an agent on behalf of an elderly parent, an incapacitated adult or a minor with specific circumstances. It’s important to note that although an agent can act on behalf of an individual with a POA, those actions are legally binding and the agent may be held accountable in less than ideal situations.
When Should You Use Power of Attorney?
Knowing when to use a power of attorney is important, as it can be highly beneficial depending on the circumstances. If an individual becomes incapacitated or is unable to make decisions due to age, health or any other factor, a POA may be used to protect their best interests.
If an individual is leaving town or will be away for an extended period of time, a power of attorney is a simple way to ensure that important decisions can still be made on the individual’s behalf—whether those decisions are financial, legal or healthcare-related.
Additional Provisions to Know About
When considering the power of attorney, there are a few additional provisions that should be taken into account.
Agent Appointment
When signing a POA, it’s important for the individual to consider who they would like to appoint as their agent. An agent can be a spouse, family member, friend, colleague or any adult with the capacity to make decisions. It’s important to note that although the agent is bound to act impartially and in the best interest of the individual, they are not personally liable if something goes wrong.
Transferable Power of Attorney
Depending on the type of power of attorney, it may be transferable, meaning it can be assigned to another individual should the original agent become incapable or unwilling to carry out their appointed duties.
Revocation
Although you may name an agent, an individual may revoke their power of attorney at any time and for any reason as long as they have the mental capacity to do so.
At the end of the day, power of attorney is all about protecting one’s best interests in the event that they become incapacitated or simply unable to make decisions—whether those decisions are financial, legal, medical or some other form. It’s important for individuals to understand what a power of attorney is, the types that exist, who it applies to, when it should be used and any additional provisions before making the decision to sign one. That way, individuals can make the best decision for their situation and can rest assured that their legal rights are protected.