Powers of Attorney 101

If something happens to you and you’re unable to communicate, how will those caring for you know how to manage your affairs? That’s the basic question answered by the power of attorney, a legal document that gives another person the authority to act on your behalf. If you are unable to make your own decisions due to illness, injury, or other circumstances, a power of attorney helps your loved ones manage your affairs and make important decisions about your business, finances, and health. The person who acts on your behalf is called the “attorney-in-fact” or “agent.”

Powers of attorney come in several flavors.

A general power of attorney is comprehensive. It gives your attorney-in-fact all the powers and rights that you have yourself. For example, a general power of attorney may give your attorney-in-fact the right to sign documents for you, pay your bills, and conduct financial transactions on your behalf. A general power of attorney ends on your death or incapacitation unless you rescind it before then.

Durable Power of Attorney
A durable power of attorney leaves your attorney-in-fact with full control of your decisions in the event you are unable to make them. This type of power of attorney usually takes effect when you become disabled or incapacitated and expires when you die. Without a durable power of attorney, if you become incapacitated, no one can represent you unless a court appoints a conservator or guardian. This is a long and difficult process.

Healthcare Power of Attorney
The healthcare power of attorney gives another person, called the healthcare agent, the legal authority to make medical decisions on your behalf if you lose the ability to communicate your preferences for treatment.

Springing Power of Attorney
If you don’t want to give up control while you’re still healthy, a springing power of attorney is something to consider. This power of attorney takes effect only upon a specified event, condition, or date. For example, if you are having surgery and the doctors need authority to do something on your behalf, your agent can assist in this decision-making process. If you are using a springing power of attorney, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly explained.

Limited Power of Attorney
A limited power of attorney gives someone else the power to act in your stead for one-time transactions when you are unable to complete them due to incapacitation, illness, or prior commitments. It’s common to use this type of power of attorney for financial, investment, banking, or real estate-related matters. For example, a limited power of attorney could give someone else the right to sign a deed to property for you on a day when you are out of town.

Making Your Decision
How do you decide which type of power of attorney is right for your situation? Your best bet is to work with an elder law attorney who can help you evaluate your options. Though it may be tempting to create powers of attorney on your own using documents downloaded from the internet, you’ll take risks if you go that route. There’s no way that a generic template can include language for your unique life circumstances. Also, an elder law attorney can help you determine who will serve as your attorney-in-fact or agent. The person serving in this role will be doing so in less than ideal circumstances, so it’s important to choose someone you trust.