Introduction to Power of Attorney (POA)
POA is a legal document that gives an individual (either the lawyer-in-fact or the agent) the power to act for another individual (the principal). The agent can hold a broad-ranging legal authority or restricted authority to undertake legal decisions concerning the principal's finances, property, or medical care.
In the event of a principal's disability or illness, or when the principal cannot be present to sign the necessary legal papers for financial transactions, a power of attorney is often used.
Let's Understand What a POA is in Detail
In the process of planning for long-term care, a power of attorney should be considered. There are various types of POAs that come under either limited attorney power or general attorney power.
A general power of attorney works in all matters on behalf of the client, as allowed by the Constitution. The agent may be allowed under a general POA arrangement to take care of issues, such as signing checks, the handling of bank accounts, filing taxes, and selling property and assets, such as stocks, etc.
On the other hand, a limited power of attorney gives the power to an agent to perform very specific tasks on the principal's behalf; the actions that an agent can perform with this kind of power of attorney is restricted and will be mentioned on the papers.
How to Set up a POA?
When you can't manage your affairs, you choose someone you trust to handle it for you. You could set up a POA that only occurs when you are no longer able to handle your own affairs or one that comes into effect immediately so that your agent can work for you in your absence. By the way, your partner does not have an automatic power of attorney over property that is only in your name.
What are the Different Types of POAs?
A conventional POA begins when it is signed and continues to be in action until and unless you end up becoming mentally unable in order to make coherent decisions.
A durable POA starts when it is signed but stays in effect throughout your life unless and until you initiate the cancellation.
A springing POA comes into picture only when a particular event occurs – for instance, your incapacitation. A springing POA should be crafted carefully to prevent any kind of problems in assessing accurately when the triggering event has occurred.
A medical POA (durable power of attorney) for healthcare-related decisions or for health care proxy, is both a springing as well as a durable POA. The springing concept means that the POA comes into effect only if certain conditions take place.
