Although many people have heard of the concept of a power of attorney, not as many are aware that there are many different types of powers of attorney (POA). Nor do they understand the difference between the POA’s.
When we talk about a power of attorney, we could be discussing a financial POA, a medical POA, or even some other designation entirely. It gets confusing, fast.
The goal of this short article is to help de-mystify several ideas regarding powers of attorney so you are better able to plan how to use them and engage with an estate planning professional.
Limited vs. General Power of Attorney
A general power of attorney allows the person named within it to do anything that you would typically do. Often, this does exclude making medical decisions on your behalf, but it is legally possible to include that power in the document as well.
One problem with a general power of attorney is that the designated person may be perfect for making financial decisions but not so good when it comes to handling other types of arrangements like running your small business or making medical decisions. That type of situation is where limited powers of attorney come into play.
A limited power of attorney specifies only one task or one type of assignment the person named can do on your behalf. For example, you may allow a person to sign papers on a house sale for you, and that is it. Or, you may assign that person the right to make all medical decisions if you cannot or take care of all financial transactions. Limited powers of attorney usually have the allowed tasks listed.
Springing Power of Attorney
A springing power of attorney does not legally go into action until a specific date or event takes place.
Let’s say you want someone else to make medical decisions for you, but only if you absolutely cannot. you want them to be able to make medical decisions for you only if you are declared incompetent or in a coma and unable to speak. Whereas you do not want them able to make medical decisions for you if you, for instance, break your leg. The most common “trigger” for springing is “incapacity.” You may see this word a lot when discussing the financial power of attorney.
Think of this type of POA as “springing into action” only when needed. The terms of when this kind of power of attorney is to be given must be mentioned explicitly in the document.
Durable Power of Attorney
A durable power of attorney becomes legally in effect the moment both parties sign the document. It is usually agreed, however, that the authority to make decisions are not to be used unless the person assigning the power of attorney cannot make the decisions on their own, or asks explicitly that the appointee do so.
Unlike the springing power of attorney, which may have a specific ending date or circumstance, the durable power of attorney remains in effect until the one who gave that power either dies or revokes it. The durable power of attorney may even stay in effect long after incapacitation of the person granting it.
As you decide which types of power of attorney to include in your estate planning, choosing whether to make them durable or not is something you will want to discuss with your estate planning lawyer.
I Still Need Help Understanding These POA’s
Every circumstance is different, so there is no generic statement that will help you figure out which power of attorney to use for your planning needs. The best thing you can do is reach out to an estate planning professional near you and start a conversation about your future.
At Atlanta Wills + Trusts Law Group by Refeca Law LLC, we are here to help you make good, educated decisions for your own well-being and your family’s too!
Contact us today for help establishing your estate plan and powers of attorney.