A power of attorney is a legal document whereby an individual (the principal) grants another person (the agent or attorney-in-fact) the authority to make decisions on their behalf. The scope of power granted under a POA can vary widely. For instance, a power of attorney can grant the agent the authority to handle legal matters or manage finances. On the other hand, it can also only allow the agent to deal with simple transactions such as utility contracts.
The primary purpose of a POA is to ensure that your affairs can be handled according to your wishes, even if you become unable to make decisions yourself due to illness, injury, or absence. Without a POA, family members may need to go through lengthy and costly court procedures to gain the legal right to manage your affairs. For some people who are busy or often out of the country, a POA is a way to delegate responsibility to trusted assistants and ensure that their financial and personal affairs are taken care of.
How to Create a Power of Attorney
First, decide the kind of POA that best suits your needs. You can find out more about the various types of POAs later in this article. Then, select someone to act as your agent. This person will have significant power over your affairs, so they must be trustworthy, reliable, and capable of handling the entrusted responsibilities. You should also consider a second person in case your first choice is unable or unwilling to take on the task.
While templates and forms are available, it is better to work with an attorney to ensure your POA accurately reflects your wishes and meets all legal requirements. An attorney can ensure you understand the implications of the powers you are granting and advise on any state-specific requirements. They will also help you to specify the powers you are granting as well as any limitations or conditions as clearly as possible.
Next, you have to sign the document. Requirements for signing a POA can vary significantly by location. Generally, you must sign the document in the presence of a notary public. Search for “notary services near me” to find an available notary public. Some jurisdictions may also require witnesses who are not parties to the document. Ensuring the proper signing protocol is followed is crucial for the document’s legality.
Once signed and notarized, make several copies of the document. Provide one to your agent, keep another in a safe (but accessible) place, and consider giving copies to the relevant financial institutions, healthcare providers, or family members. Some states may also require the POA to be registered with a court or government office, particularly if it pertains to real estate transactions.
Types of Power of Attorney
Since power of attorney can encompass a wide range of decision-making authority, there are several types that vary in scope and durability.
General Power of Attorney
A general POA is broad, granting the agent the authority to perform almost any legal act on behalf of the principal, from managing finances and handling business transactions to buying or selling property. It is particularly useful for handling affairs during extended travel. This type of POA offers the broadest authority of all POAs, making it both powerful and potentially risky.
Durable Power of Attorney
A durable POA is close to a general POA in terms of the breadth of powers granted, but with a key distinction—it remains in effect if the principal becomes incapacitated. This type of POA is used to make sure that someone can manage your affairs if you are unable to do so yourself due to mental or physical incapacity. It is often used in planning for aging, chronic illness, or surgery.
Healthcare Power of Attorney
A healthcare POA grants the agent authority specifically for medical decisions on behalf of the principal. This can include treatment options, surgical decisions, pain management, and end-of-life care. It is a critical document for anyone concerned about who will make decisions for them in a medical crisis. The healthcare POA specifically addresses medical scenarios and cannot govern financial or other decisions.
Limited or Special Power of Attorney
A limited or special POA grants the agent authority to act in specific instances or for particular tasks, such as selling a property, managing certain assets, or completing a specific transaction. Unlike the broad and potentially ongoing authority granted by other types of POAs, a limited POA has a narrow scope. It expires once the task is completed or at a time specified by the principal.
Revoking a Power of Attorney
The good thing about a POA is that you can revoke it at any time as long as you are mentally competent. You can do this by writing a revocation letter to the agent and any relevant third parties or creating a new POA that explicitly states that it revokes any previous POAs. Destroying the original document and any copies is also advisable to prevent unauthorized or accidental use.
Conclusion
A power of attorney is a powerful legal document that can ensure that your wishes are followed when you are unable to attend to affairs yourself. Given the potential complexities and legal ramifications involved, consulting with a legal professional when creating a POA is highly recommended.
