One of the most common estate planning tools is a Power of Attorney. A Power of Attorney, or POA, can be an effective tool to help achieve a wide variety of estate planning goals, as long as the right type of POA is used. In part because people are so familiar with the concept of a POA, the authority granted in one is easily abused or misused. Before you execute a Power of Attorney be sure you discuss your intended goal with your estate planning attorney. In the meantime, a Baldwin Hills estate planning attorney from Collins Law Firm explains the different types of Power of Attorney available and what type of authority they grant to an Agent.
What Is a Power of Attorney?
At its most basic, a Power of Attorney is a legal document that allows you (referred to as the “Principal”) to grant another person (the “Agent”) the authority to act on your behalf in legal matters and transactions. The type and extent of the legal authority you grant to an Agent depends on the type of POA you execute. Failing to understand the extent of the authority granted in a POA is a common, and potentially very dangerous, estate planning mistake.
Do I Need a General or Limited Power of Attorney?
A POA can be either general or limited. A general POA grants your Agent almost unlimited power to act on your behalf. This means that your Agent may be able to do things such as withdraw funds from your financial accounts, sell property and assets owned by you, and even enter into contracts in your name. There are, however, some statutory limits to the authority granted in a general POA.
A limited POA only grants to your Agent the limited, and specific, authority enumerated in the POA. For example, you might grant an Agent the specific power of attorney to act on your behalf during the sale of your home while you are out of the country on a trip. A limited POA is also a tool that is often used by the parents of a minor child to grant a caregiver the authority to consent to medical care for the child should an emergency occur while the parent is away.
Should My Power of Attorney Be Durable?
If you want your Agent’s authority to survive your incapacity, it must be made durable. Historically, the authority granted to an Agent in a POA automatically terminated upon the death or incapacity of the Principal. As you may well imagine, however, the possibility of becoming incapacitated is a common motivation for executing a POA. In other words, many people create a POA specifically to ensure that their Agent named in the POA has the authority to act on their behalf if they suffer a period of incapacity. That doesn’t work, however, if the POA terminates upon the incapacity of the Principal. To resolve this problem, the concept of a “durable” POA evolved. When a POA is made durable it means that the Agent’s authority survives the incapacity of the Principal.
What Is a Springing Power of Attorney?
Yet another type of Power of Attorney is a Springing POA. Both a general and a limited POA can be a Springing POA. A Springing POA has special language in it that causes the Agent’s authority to “spring” into action at a specific time or upon the occurrence of a specific event. For example, you might create a general POA that does not actually go into effect unless you have been missing for more than 48 hours or until you have been declared incapacitated by a physician.
What Does a Health Care Power of Attorney Accomplish?
If your goal is to give someone the authority to make medical decisions for you if you cannot make them yourself, you need a California Power of Attorney for Health Care. A POA for Health Care is a type of advanced directive that allows you to appoint an Agent to make health care decisions for you is your primary doctor determines that you lack the ability to understand the nature and consequences of your health care decisions or the ability to make and communicate your health care decisions yourself.
Contact a Baldwin Hills Estate Planning Attorney
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns relating to a Power of Attorney, be sure to consult with an experienced Baldwin Hills estate planning attorney. Contact the Collins Law Firm by calling (310) 677-9787 to register for one of our FREE estate planning workshops.
- Are There Expenses Involved in Administering a Trust? - December 1, 2022
- Is a Will or a Trust Better for Distributing Estate Assets? - November 30, 2022
- How Is Estate Planning Different If You Have Minor Children? - November 28, 2022