If something were to happen and you became incapacitated, does your family know your wishes regarding your finances and long-term healthcare arrangements? In today’s modern world it is imperative that you make sure that your family knows your desires.
We live in a society that is overflowing with rules and legal red tape, and you owe it to your family to make sure they are taken care of in the event of the unthinkable happening to you.
Part of this responsibility is knowing about certain legal documents that are important and would have an everyday impact.
One of these important documents is the power of attorney.
Legal Power of Attorney
While the legal power of attorney document is fairly simple to understand, it has a wide reach of power that can impact everyday life.
There are certain powers of attorney that everyone needs to have in place. For example, in the event of an accident, it’s important for your family to know your wishes for healthcare in case you are unable to communicate those wishes to them at the time of a tragic occurrence.
Disclaimers About Power of Attorney
Before we continue, we need to ensure that all readers understand that this post is not a guideline, but a collection of information to help inform you of actions you should take to ensure that your legal financial power of attorney is properly taken care of.
The law is broad and varies from state to state, so it’s important to remember that this is an incomplete list of information that’s meant to help be a launching pad for your research. Be sure to consult with a lawyer before you sign any legal document.
What is Power of Attorney?
Power of attorney is a legal document that requires two parties to make. This document gives one person the authority to act for and represent another in their legal, business, and private affairs for reasons like diminished capacity.
In this agreement, the person who is giving authority to another is known as the donor, grantor, or principal.
Depending on the jurisdiction you reside in, the authorized person is referred to as the agent or in some cases the attorney-in-fact.
It is important to know that a power of attorney spells out in exact detail, what powers are granted, and the circumstances for when the power is granted.
Due to the legal nature of the document, there is an active intent to make sure there is no vague language or loopholes in the document.
Regardless of the jurisdiction in which power of attorney is being sought, it can only be given when the grantor has the required mental capacity to make such a decision.
Without a power of attorney in place before someone suffers incapacity, the only means in which someone can act on their behalf is to have a court establish a guardianship or conservatorship.
That said, only certain types of power of attorney are still in effect if a person loses their mental capacity from accident or disease.
Durable power of attorney is granted by an individual so that even if they are incapacitated, his or her agent is still able to act on his or her behalf.
For a power of attorney to be executed, at the very minimum, it must be signed and dated by the principle.
Depending on the jurisdiction in which you reside, there may be a need to get the document notarized, witnessed, or both.
In order to give your power of attorney added weight in court, it doesn’t hurt to have the document itself reviewed, signed, and stamped by a notary public.
The Various Types of Power of Attorney
Here are a few of the different types of power of attorney that one can get.
General Power of Attorney
A general power of attorney is a document which allows an agent to conduct practically any kind of business on the grantor’s behalf. This is a very broad power which covers every kind of business and financial transaction and has no restraints.
Due to how powerful this document is, it is very important that the agent wielding this power can be trusted to remain vigilant over all of the ongoing transactions.
Limited Power of Attorney
A limited form of power of attorney – also known as special, general, or temporary power of attorney – is one that is limited for only a very specific type of act or acts.
For this one thing, the agent can make all of the personal and business choices. The agent is only allowed to act within the specific parameters and timeframe outlined in the document.
Springing Power of Attorney
Springing power of attorney is a document which comes into effect only after there is an incapacitation of the granter, or some other defined circumstance, or future act.
This type of power of attorney is intended to be used only in the case mentioned. This means that if the defined circumstance never comes to pass, then the power never comes into effect.
Due to the strict specifications in this type of power, there is a formal process to determine whether the granter is truly considered incapacitated.
Health Care Power of Attorney
Health care power of attorney, sometimes called a health care proxy, is a document which the power of attorney has the authority to make health-care decisions for the grantor.
These decisions include regular care decisions - all the way up to life support and the decision to end care for the grantor.
Generally, the grantor can make modifications to this document to give more exact directions for any sort of end of life decisions that may need to be made.
Power of Attorney with Durable Provisions
Power of attorney with durable provisions, also called enduring power of attorney, is a document which becomes ineffective if the granter becomes incapacitated or dies.
Unless the granter specifies otherwise, the authority of the power of attorney becomes ineffective once the grantor dies.
These types of documents are normally drafted by seriously ill patients who want to enable their agent to handle their affairs because they are not able to do so.
Typically, there are two types of durable power of attorney: a financial power of attorney, and a durable power of attorney for health care.
Depending on the specifics outlined in the document, the one for these powers can allow the power of attorney to handle matters before, during, or after the issuing agent becomes incapacitated.
Depending on what the issuing agent desires, one or both powers can be drafted into the same document to ensure that exactly what the grantor wants will happen.
When both are combined, it is a financial power of attorney with a durable power of attorney for health care.
Specialized Uses for Power of Attorney
There are specialized circumstances in which a power of attorney can be used.
A living will, also know as a Healthcare Directive, is a type of health care related power of attorney. This is a durable power of attorney in which the agent grants authority to make decisions on their behalf regarding health care.
The point of this document is to help inform doctors of the agent’s preferences regarding certain types of medical treatment and any life-sustaining procedures in the event the agent is unable to communicate his own wishes.
If this document is prepared properly, the agent’s physician is legally obligated to fulfill the conditions. If the doctor finds he is unable to honor the document, then he is obligated to transfer the agent’s care to a doctor who will.
If a business or club is run using Robert’s Rules of Order, there is a provision made in the rules for proxy voting.
Granting proxy voting involves giving someone the power of attorney to vote on your behalf. This power is typically for a single meeting for one or multiple votes in which the granting agent is unable to attend.
Financial Power of Attorney
There are other certain financial situations where a power of attorney is needed.
For example, if a principal makes a request of a securities broker to do a large amount of investment without input on the principal’s behalf then there is need for a document to be signed.
The need for a power of attorney also extends to situations where a principle will instruct her broker to perform specific trades as well.
Know Who You’d Entrust with Your Decisions
Nobody wants to think about end of life questions, but it is important to know what will happen to your family if something were to happen to you.
Remember that every country and state has its own laws when it comes to how power of attorney works and the process by which you secure it. While it is important to say that you need a financial power of attorney today, it is equally important to say that you need to do your research before making a major decision.
Before you make any major legal decisions, make sure you consult a lawyer whose area of expertise includes the area of financial matters and power of attorney.