Updated for accuracy, comprehensiveness and freshness on July 16, 2024.
You’ve likely heard the term “power of attorney” (POA) many times. But do you really need one? In a world where unexpected situations can arise at any moment, understanding the value of the power of attorney is crucial.
A LegalShield Provider Attorney can help clarify what a POA is, the different types of power of attorney, and why a power of attorney might be crucial for you and your loved ones.
Why you might consider a power of attorney
A Power of Attorney (POA) is a legal document that allows someone else to make decisions on your behalf, acting as your agent. This can be especially important in unexpected situations where you might be unable to manage your affairs or make crucial decisions. For instance, with a medical POA, your agent can make essential healthcare decisions for you.
Different types of power of attorney
Now that we have discussed the importance of having a POA, it is essential to know the various types available. Each type of POA serves a specific purpose and offers certain levels of authority to your agent. Here are the four main types of power of attorney: Limited; General; Durable; and Springing.
1. The limited power of attorney
As the name suggests, a limited POA grants someone the authority to act on your behalf for a specific purpose and for a specified time. This type of POA ends once the task is completed or after a certain date.
Example: An author may use a limited POA to allow their agent to cash checks made payable to the author during a specified time, ensuring the agent can deduct their commission and pass on the remainder to the author. Another scenario could be appointing someone to sign a property deed on your behalf while you’re on vacation.
2. The general power of attorney
A general POA provides a broader scope of authority, enabling someone to handle nearly all your affairs. This type of POA is useful when you need someone to manage your financial matters comprehensively.
Uses of general POA:
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- Collecting debts
- Applying for government benefits
- Managing financial and business matters
- Buying, selling, or making investments
- Filing lawsuits
A general POA remains in effect until you revoke it, you become incapacitated, or you pass away.
3. The durable power of attorney
The key difference between a general and durable POA is that the durable POA remains effective even if you become incapacitated. This type of POA ensures your agent can continue to act on your behalf if you are unable to do so.
Example: If you have been diagnosed with a disease that affects mental capacity, a durable POA would allow your agent to manage your affairs once you are no longer capable.
4. The springing power of attorney
A springing POA only takes effect upon the occurrence of a specific event. It’s crucial to clearly define what will trigger the POA in this document.
Example: If you serve in the U.S. military and are scheduled for overseas deployment and duties which may place you in a situation where you become incapacitated, a springing power of attorney can stipulate that your designated sibling can act on your behalf.
Durable vs. non-durable power of attorney
What’s the difference between a durable and non-durable power of attorney? The main distinction between them lies in their duration of effectiveness. A durable POA can be active immediately upon signing and continues to be valid even if the assignor becomes incapacitated. A non-durable power of attorney gives authority for someone else—your agent—to make decisions for you, but only within certain limits. In addition, with a non-durable power of attorney, it ends if you become incapacitated. However, all types of POA become void upon the assignor’s death.
Having a POA in place is about more than just legal protection—it’s about peace of mind. By ensuring that your affairs are managed you can safeguard your future.
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