A power of attorney is a legally binding document that can be used for various different purposes. With a power of attorney you give another person, called an agent or attorney-in-fact, the power to act on your behalf.
There are different types of powers of attorney. Let’s take a look at some of them.
Limited Power of Attorney
A limited power of attorney is used to give the agent the ability to act on your behalf on a limited basis. The limitations are entirely up to you.
It is possible to allow someone to act for you for a broad range of purposes over a limited period of time. You could alternately limit the power of attorney to certain types of transactions, or to a single transaction.
When you create a limited power of attorney you have control. You decide on the limits.
General Power of Attorney
A general power of attorney gives the agent sweeping power to act on your behalf. Under a general power of attorney the agent can do all the same things that you can do for yourself.
Giving someone this level of power may be a little bit disconcerting. However, sometimes a general power of attorney is necessary because you need someone to be able to act on your behalf in a comprehensive manner.
Durable Power of Attorney
Durable powers of attorney are used by estate planning attorneys who are helping people plan ahead for possible incapacity. If you could not handle your own affairs, who would handle them for you? You answer this question yourself by executing durable powers of attorney.
Because these powers of attorney are designated as durable, they remain in effect even if you become incapacitated. A power of attorney that is not durable would not stay in effect if the grantor was to become incapacitated.
A durable power of attorney for health care is an advance health care directive. Every comprehensive estate plan should include advance directives for health care.
A durable power of attorney would go into effect immediately unless you stipulate otherwise. It may be possible to execute a springing durable power of attorney that would only go into effect if you were to become incapacitated.
Incapacity Planning Consultation
A surprising percentage of senior citizens ultimately become incapacitated late in their lives. Alzheimer’s disease alone strikes about 45 percent of people who are at least 85. Of course, Alzheimer’s is not the only cause of incapacity.
All serious minded individuals should prepare for possible incapacity. Durable powers of attorney will usually be part of the plan.
If you would like to discuss incapacity planning with a licensed attorney, we invite you to contact our firm to request a free consultation.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.