You’ve probably heard of a power of attorney, or POA, and wonder what they are used for and how they can benefit you during estate planning. A POA is a legal document that grants legal authorization to another person to act on your behalf. You can execute a POA for a number of reasons, such as health reasons, incapacitation, or simply have someone else be able to sign legal documents for you while you are away.
A power of attorney is a great way to keep affairs in order when someone cannot fully care for themselves and need a helping hand. This article will discuss the basics of a power of attorney and the different types, and why you should consider getting one drafted.
Power of Attorney Explained
A power of attorney grants another person, known as the “agent” or “attorney-in-fact,” legal authority to act on behalf of another person, referred to as the “principal.” Power of attorney documents can be drafted for various functions and decisions, such as medical care, financial arrangements, legal matters, and real estate functions. The principal can execute a power of attorney to have limited or broad authority depending on the needs of the individual. There can also be separate power of attorney roles to handle individual matters for the principal, such as one person for healthcare choices and another power of attorney for financial matters. The principal has the choice to delegate depending on their wishes.
Types of Power of Attorney
Several different types of power of attorney can be drafted depending on the principal’s specific needs. Here are a few types:
- Durable Power of Attorney: This type of power of attorney allows a principal to appoint an individual to handle their financial and other matters, even if they become incapacitated or mentally incompetent. Many people opt for a durable power of attorney because it provides security should anything happen to them.
- Medical Power of Attorney: This type of power of attorney is often called a healthcare proxy or healthcare power of attorney and specifically handles medical decisions.
- Limited Power of Attorney: A limited power of attorney only grants the principal’s agent specific or limited authority.
- General Power of Attorney: This type of power of attorney is the most common because it gives broad authority to a single individual, allowing them to conduct business, legal transactions, medical decisions, and more. This type of power of attorney allows one individual to handle multiple tasks for the principal.
- Springing Power of Attorney: This type of power of attorney gives the principal full control over their affairs until a specific action happens. A springing power of attorney goes into effect or springs when that action or condition occurs.
Why You Need a Power of Attorney
Life is full of surprises, and a power of attorney can benefit anyone, young or old. Many people mistakenly believe that only the elderly need a power of attorney, but the fact is that even young people experience times during their lives when they are unable to manage their affairs and healthcare decisions. A power of attorney can give a trusted family member or friend the authority they need to properly take care of you and your assets should you ever become incapacitated. Here are a few situations where a power of attorney can be helpful:
- Healthcare Decisions: Many people depend on someone else to make important healthcare decisions for them at some point in their lives. You never know when serious injury or illness may strike, and it’s good to have someone properly authorized to help you.
- Financial Arrangements: People often lose track of their finances when incapacitated, leading to overdrawn bank accounts, unpaid bills, and even foreclosure. An agent can handle the financial side of your life should you ever become incapacitated and have a power of attorney in place.
- Estate Planning: A power of attorney is one of the key pieces to a comprehensive estate plan. Everything you have worked your entire life for can come crashing down if you become incapacitated and don’t have a power of attorney established.
A power of attorney is an important legal document that has a place in your estate plan. An experienced estate planning attorney can help you draft the proper documents and answer any questions you may have.
Progeny Law Firm assists clients with estate planning in Baton Rouge, LA. Call (225) 465-1090 or contact us online for a free consultation.
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