A Power of Attorney is a legal document that allows you to appoint someone to handle your personal matters in the event you cannot. A Power of Attorney, however, does not come in a one-size-fits-all. There are different types of Powers of Attorney to manage your finances, health care decisions, and even your pets.
Why Do I Need a Power of Attorney?
We’re going to do a breakdown of each type of Powers of Attorney. But first, you may be asking why you would need one.
Suppose you become seriously ill where you are incapacitated, or you are travelling and will be away for weeks or even months. Who will pay your bills? Manage your finances? Run your business? This is where a Power of Attorney steps in to take care of your affairs.
When you’re giving Power of Attorney, you (known as the principal) are granting authority to a person (known as an agent or attorney-in-fact) of your choice that you named in the document to act on your behalf. With a Power of Attorney, depending upon what powers you grant, your agent can:
- File your income taxes
- Sign contracts
- Manage financial accounts
- Make legal decisions
- Sell property
A Power of Attorney does not have to be a lawyer. It should be someone you trust that will carry out their duties as you stipulated in the document. A Power of Attorney is a critical tool that should be part of your estate planning arsenal.
Types of Powers of Attorney
The great thing about a Power of Attorney is that it can be tailored to your specific needs. You can give your agent carte blanche powers or limited authority. Also, you can set limits on the length of time the Power of Attorney is valid. It’s up to you and your situation how much authority you want the Power of Attorney to have.
Each type of Powers of Attorney has its specific purpose:
General Power of Attorney
This agent/attorney-in-fact has broad authority to make decisions and manage matters including your business, personal and business finances, paying bills, settling claims, and buying life insurance. It’s a good choice if you become incapable of making decisions or you are going to be out-of-state or out of the country and need someone to take charge of your affairs, even on a temporary basis.
Durable Power of Attorney
If you become mentally incapacitated while your Power of Attorney is in effect, the Durable Power of Attorney designation ensures your agent will continue to act on your behalf. If you do not have this in place and you become mentally impaired, a regular or General Power of Attorney’s authority is rescinded and this person can no longer manage your affairs. In this case, your family would have to petition the court to seek conservatorship so they could handle your matters. The Durable Power of Attorney retains authority in the event of your incapacitation.
Power of Attorney for Medical Care
Also known as a Health Care Proxy, you name a person to make your healthcare decisions if you are unable to make them on your own. If you’re in a bad accident or suffer a sudden illness where you cannot speak for yourself, your Power of Attorney for Medical Care has legal authority to carry out your medical treatment wishes such as life support, surgery, releasing medical records, and choosing health care facilities. In some states, you can outline your health care wishes in a Living Will, while in other states, these are included in the Health Care Proxy document.
Limited Power of Attorney
As the title suggests, this agent has restricted authority where you give specific power and duties. This could be signing a contract on your behalf, conducting a financial or business transaction, selling property, or managing a financial account. It’s generally utilized if you are indisposed or traveling and not able to be involved in the matter. In recent years, investment account holders have granted Limited Power of Attorney authority to investment advisors so they can make routine decisions about their portfolios. You can also put limits on the duration of the Power of Attorney and set it for specific dates.
Pet Power of Attorney
This type of Power of Attorney has become really popular lately and ensures your pet will be cared for in the event you are away or become ill. You appoint a caretaker – an individual or facility – and provide instructions as to your pet’s veterinary care, grooming, and food. You can authorize a Limited Pet Power of Attorney if you are vacationing and leaving the pet in the care of someone, or a Durable Pet Power of Attorney that provides unlimited powers for long-term care.
A Power of Attorney for Every Need
As you can see, there is a Power of Attorney document for any type of situation where you would need someone to manage financial or business affairs on your behalf. If you are ill and cannot manage your affairs, or you are just not available to perform certain financial or legal tasks due to travel or other circumstances, there is a Power of Attorney for just about every need. Gentreo allows you to customize a Power of Attorney for your situation. You can securely store your documents in the Gentreo Digital Family Vault where they can be accessed anytime from anywhere.
