Life is a series of choices, but what would happen in the event that you were no longer able to make those decisions on your own? Many individuals choose to grant an agent, i.e. a child or spouse, power of attorney (POA) for this very reason. Electing a power of attorney to someone you trust ensures that you are well taken care of. Your agent will prevent you from being mistreated or subjected to situations you would not have chosen for yourself. Often, an agent such as this will assist you in your later years, but there are numerous other instances where a helping hand may be beneficial.
Frequently Used Types of Power of Attorney
General POA allows an individual or organization to make a broad variety of decisions on your behalf. Typically, a general power of attorney is necessary when you are out of the country or physically or mentally incapable of handling your own affairs. Financial investments, life insurance purchases, claim settlements and business operating decisions are simply a handful of matters an agent with general power of attorney may coordinate on your behalf.
Special POA gives you the authority to specify exactly what matters your agent of choice may handle. Individuals routinely find a special power of attorney useful when selling real estate, collecting debt and handling business interests.
Healthcare POA permits an agent to navigate your medical care dilemmas if you are unconscious, mentally incompetent or otherwise unable. However, you may spell out your desired wishes ahead of time in a living will or an advance healthcare directive. For more information, see Living Trusts and Wills.
Springing POA is only valid after you become incapacitated.
Durable POA takes effect immediately and ensures that your agent may continue to act in your interest for the remainder of your life. Thus, it is an essential aspect of proper estate planning.
Dangers of Handing Over Legal Control
Granting an inappropriate type of power of attorney or issuing POA with unclear documentation can place you at great risk. When you grant someone general power of attorney, for instance, that person then has the ability to borrow money, access your bank accounts, sell your personal property, purchase real estate and enter into legal contracts under your name. Therefore, it is unwise to hand over legal control without the knowledge and expertise of a trained attorney.