A power of attorney is a legal device that most people have heard about at some time or another. On the surface, the device can seem rather simple and straightforward. You would use a power of attorney to give another person the authority to act on your behalf in a legally binding manner.
This is the basic principle, but there are a number of things that the typical layperson simply would not know about a power of attorney. Let’s look at some of them.
1.) The Agent
When you decide that you want to give someone else the power to act on your behalf, the person that you would be empowering under a power of attorney is called the agent or attorney-in-fact. When some people hear the term “attorney-in-fact,” they assume that you have to use a lawyer to act as your agent.
Without question, if you are executing a power of attorney, you would do well to work with a licensed attorney when you are creating the document itself. However, an agent does not have to be a practicing attorney, and you don’t need a law degree to act as an agent under a power of attorney.
The agent must be an adult who is of sound mind, and the person that is named as the agent must be willing to assume the role. You can’t force someone to act as an agent against his or her will.
2.) Limitations
It would be natural to go forward with the assumption that you would be giving the agent the ability to act on your behalf in a comprehensive manner if you were to create a power of attorney. In fact, this does not necessarily have to be the case.
You would be giving the agent the sweeping power to act on your behalf if you were to create a general power of attorney. In essence, the agent would be legally empowered to do just about anything that you could do for yourself.
However, there is another option if you do not want to give this much power to another person. You could execute a limited power of attorney. As the name would suggest, with this document you can give the agent the power to act on your behalf under limited circumstances, or for a limited period of time.
3.) Incapacity
A standard power of attorney would no longer be in effect if the person who granted the power was to become incapacitated at some point in time. The agent would not be legally empowered to act on behalf of the incapacitated grantor.
4.) Durable Powers of Attorney
Though a standard power of attorney would no longer be in effect, there is a specific type of power of attorney that can be used for incapacity planning purposes. This would be a durable power of attorney. If you were to execute a durable power of attorney, it would still be in effect, even if you were to become incapacitated at some point in time.
There is a form of durable power of attorney called a springing durable power of attorney. If you don’t want to give the agent the power to act on your behalf as soon as you execute the document, you could use a springing durable power of attorney. This power would only become effective in the event of your incapacitation.
5.) Termination
A power of attorney will terminate whenever you stipulate that you want it to terminate when you create the document. If you want it to remain in effect throughout your life, you can state this when you create the power. This would probably be the right choice if you want to use a durable power of attorney to prepare for possible incapacity.
However, any type of power of attorney will terminate upon the death of the grantor. As a result, if you execute a durable power of attorney to account for latter life incapacity, the agent would not be empowered to administer your estate.
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