Types Of Power Of Attorney

Power of attorney is not a person or some kind of law. It is a document that allows a person to represent another to handle their business and other personal affairs. This often happens when the principal or the grantor (the one who is authorizing another person to act in their stead) is unavailable or not present when the deal comes through. This is very common among executives of corporations especially those in the higher ups, who need to take care of business in all parts of the globe. If they cannot make it to one area, they usually send a representative with a power of attorney to sign their documents for them.

In corporations, the grantee or the proxy (the one given the power of attorney) is often an attorney to keep things legal but in truth, anybody can be given a power of attorney, even those who are not lawyers. In fact, this is why proxies like these are often called attorney in fact to differentiate them from attorney at law. In the United States, the word attorney is commonly used to refer to them.

There are however many types of power of attorney depending on the nature of the contract, the scope of the power and the period that it is valid. The most common is of course the general power of attorney which authorizes the agent to act on your behalf and to represent you in dealings and other matters. It covers all kinds of transactions. The validity of the agreement or the contract will of course be stated on the document.

The special power of attorney on the other hand only gives an agent the authority to act specific matters. For instance, you can authorize an agent to sign a business contract for you but only that business contract and no other documents. Some are also given a section, for instance, a special power of attorney to look into the financial matters and to manage it and sign documents pertaining only to financials.

A power of attorney will only last on the stated date and if there is no date specified, it will cease to be effective when the principal becomes gravely ill, incapacitated or mentally incompetent.

The Health Care power of attorney is one that allows a grantee of the document to decide on your health care service should the principal be deemed incapable of making a decision. This is very sensitive because the grantee will have the power to allow or disallow health care and will even be able to decide if hospitals will pull the plug in case the principal falls into a coma. There is also what they call the Psychiatric Advance Directives, which gives the grantee the right to decide for the care and treatment of someone who is mentally ill. Sometimes, this is appointed by the parents or by the courts, depending on who had guardianship on the person.

Anytime, the power of attorney given to a person can be revoked regardless of the specified period stated in the document. This is especially true when trust has been broken.

An Insight On The Different Types Of Power Of Attorney

There are different types of power of attorney. These are meant to ensure that the needs of the principal is properly addressed and provided for. When preparing or creating a power of attorney, it is important to get lawyer assistance.

They would be able to help you identify what type of power of attorney would be best suitable for your needs.

• General power of attorney

The general power of attorney provides the attorney-in-fact (or agent) authority in all situations unless specified by the document. General power of attorney would include accessing safe deposit boxes, setting up trusts, transferring assets to trust funds, filing tax returns, entering contracts, representing the principal (signor of the document) and buying and selling property.

This type of power of attorney would be valid unless specified by the document, the principal dies or revokes the document, or the document specifies that it would end upon the event when the principal gets incapacitated or disabled.

• Specific power of attorney

If the attorney-in-fact is only granted authority over specific transactions like collecting debts, buying and selling property, then it is referred to as the specific power of attorney. The attorney-in-fact would only perform duties specified in the document until the principal revokes the document. Aside from revoking, both general and specific power of attorney is discontinued upon the principal’s incapacity and death.

• Non-durable power of attorney

The clear characteristic of the non-durable power of attorney is that it is for short-term transactions only. In a situation when the principal could not handle a transaction, then this type may be more suitable. Usually, this kind of power of attorney has an expiration. When the principal becomes incapacitated or is no longer able to provide authority for the continuation of the power of attorney, the document is no longer valid.

• Durable power of attorney

Unlike the non-durable type, the durable power of attorney can continue even after the principal becomes incapacitated or becomes incompetent in making decisions. The durable power of attorney can be terminated if the principal would terminate it or in the event of the principal’s death.

Durable power of attorney could cover health and care decisions, like discontinuing life support or surgery. It could also include financial matters unless specified by the document and the principal.

• Springing power of attorney

The springing power of attorney would “spring” in a specific event which is specified by the power of attorney. It could be an event of disability, illness or travel abroad. it would only be valid, if there are doctor or doctors which identified that the principal is indeed incapacitated.

However, it may pose some problems since mentally incapacitated is defined subjectively and difficult to determine. So it is not recommended that durable power of attorney would be “springing.”

• Health care power of attorney

This power of attorney is specified for only health care issues and is commonly used by principals who are suffering from terminal or mental illnesses. This kind of power of attorney is only contained in medical scope and could not be used for other duties.

Important Considerations When Creating a Financial Power of Attorney

What are the ways to put your finances in order when time comes you are unable to do so? Setting up a power of attorney (POA) is one of your options when it comes to managing your daily financial affairs and transactions under certain circumstances such as when you are undergoing medical treatment or out of the country. It refers to a legal document that allows an individual or a financial institution such as a bank to manage your finances whether you are capable or not of doing it on your own.

The following are the essential considerations that you need to think about when creating a financial power-of-attorney document:

1. The need for a POA

Do you think you need help with handling your financial affairs? There are certain situations in which powers of attorney are not needed. For instance, if you own a big estate, you may be better off preparing a revocable living trust that offers great tax benefits and fits your needs. You may want to consider having both a financial POA and a revocable living trust.

2. The person who will act as your attorney-in-fact or agent

Take time in choosing the right agent who you will trust to carry out your financial tasks with your best interest in mind. Here are some of the characteristics that you should consider when selecting your financial agent:

• Financial savvy

• Trustworthy and comfortable to work with

• Can devote enough time to perform the required financial responsibilities

• Accessible and lives near your residence so that you can easily discuss with him or her any pertinent concern about your POA

• Can commit to carry out his or her duties as an agent if you are unable to handle your finances for a long time

Once you have chosen an agent, don’t forget to discuss the tasks, including the financial duties involved.

3. The forms you will use for preparing the power-of-attorney document

Use the power-of-attorney forms available online as your model or starting point. Before you consult with a lawyer, it is best to view several POA forms and understand fully the terms specified on them. That way, you can see the various possibilities before you head over to a lawyer’s office.

There are many sources of POA forms online these days. You can download a form from the Internal Revenue Service (IRS). You may opt to look for a particular POA form for your state on some websites that specialize in legal documents.

If you are about to finalize your POA document, you have to consult a lawyer first. You can ask the lawyer about the form of authority that suits your needs best as a principal.

4. The parties that will receive the power-of-attorney documents

Your power of attorney must be put in writing, signed by all parties involved (including the witnesses), and duly notarized. If the terms in the POA are related to taxes, it must be filed at the state government. If the terms are related to your real estate, your POA document must be filed at the office of the local county recorder.

How an Agent in Your Power of Attorney should Manage Your Money

The power of attorney is most welcomed by many people because of its function to appoint a person to make decisions on your behalf. In case you get sick or you go out of the country and there would be important errands or transactions to be done, you could be sure someone would appropriately takeover to make sure everything is in place. If you are considering getting a power of attorney, you should make sure you are appointing the right agent or attorney-in-fact (the person who would be given authority to make or execute decisions for you).

One usual issue about power of attorney and appointment of agents is the way the person manages or handles finances. In the power of attorney, especially for the ‘durable’ one, that same agent is given the full authority to manage and handle all your money and assets in case you get mentally incapacitated. That is why many people choose to appoint their spouses or relatives as agents. But there are still issues and conflicts arising in such situations.

How could you make sure your agent would be using the authority well? First, you should appoint a person who you have already proven to be trustworthy and reliable. He/She should be highly ethical so as not to defraud you or steal money from you. Second, that person should have the ability to prudently and effectively manage finances. If not, he/she should be humble and wise enough to seek assistance from experts and professionals to make sure your finances are well managed and handled.

To be able to handle and manage your finances better, your agent must always decide to keep his/her own money separate from yours. Thus, there would be no confusion. The agent must not be personally involved in any transaction where he or she is representing your interests. For example, he/she must not be a stock investor who would gain more from buying your shares in a company in an inappropriate manner or pricing. The agent should be firm in keeping accurate all records pertaining to all transactions he/she gets into on your behalf.

You could have the option not to include specifications or instructions that would give your agent the permission to transfer to himself/herself any of your property or bank account. The law usually allows the agent to transfer your assets to your spouse (if your agent is not your spouse). However, the law does not allow him/her to transfer any of your properties to any other individuals, even your children.

Always seek the assistance and guidance of your private attorney when making or drafting the content and provisions of your power of attorney. It is more recommended that you do so especially if the document would involve your properties, savings, and income. You could still safeguard your assets even if you get into a power of attorney. That is if you could be more wise and prudent in making decisions.

Watching It: Power Of Attorney And Problems

The power of attorney is a legal document which gives a person or an organization power to govern finances, business or even personal issues. The person entrusted with this power/ authority is called the agent or attorney-in-fact while the person who signed the document is the principal.

The power of attorney is usually used to handle financial or business affairs when the principal is not available or incapacitated. There are power of attorney documents which allow the agent to continue being authority even the principal is no longer mentally capable. However, in elderly cases, power of attorney could be abused.

Financial/material abuse is the second highest rate of elderly abuse with 42%, following psychological abuse (59%). Financial abuse would include misusing the power of attorney, using the adult’s money for other purposes, pressuring adults to sell their home or property, cashing out the adult’s pension or cheque, or pressuring the adults to buy alcohol or drugs.

Abuse of the power of attorney could be intended or a sign of negligence. For example, a niece who runs off with her aunt’s money when given the power of attorney is a sign of intended abuse. The principal may not be able to monitor how transactions are made and eventually caused the agent to misuse his or her finances.

When identifying the person who would represent the interest of the principal, it is important to determine a person who is trustworthy and would not betray the interest of the principal. In addition, if the principal feels that the power of attorney is being exploited, then it would be time to get legal support.

Aside from issues about the agent’s trustworthiness, another common problem with the power of attorney is that the authority is too broad. When the principal uses the general power of attorney, the agent would find himself handling real estate, securities and large financial transactions.

To avoid this problem, the power of attorney should be specific enough. Identify particular obligations or transactions that the agent or attorney-in-fact could handle. Also, to avoid problems with abuse in the document, the American Bar Association suggests that list any powers that the principal don’t want the agent to have, like altering the principal’s will or giving away the principal’s property.

It may prove to be difficult for the agent to handle everything. In some cases, a co-agent is assigned by the principal to ensure that not all responsibilities would burden one agent. To exercise more control on the transactions, the principal is also recommended to ask regular reports from the attorney-in-fact/ agent.

Being aware of such issues about the power of attorney could help principals and those who are thinking of getting such document, be cautious. Although, there are forms on the internet that would allow you to create the power of attorney quicker, it is always advised that such document be made in with legal assistance. After all, the agent would be given authority over the things that we have worked for for most of our lives.

Seven Steps in Preparing a Power of Attorney

Are you going to create a power of attorney (POA) yet you don’t know how to start? Various situations call for authorizing another person to take care of your finances, real estate, health care, or other affairs as well as make legal decisions on your behalf. Preparing power-of-attorney documents is not as complex as it seems. Listed here are seven easy steps to help you come up with a proper power-of-attorney document.

1. Gather all the forms you will use as models for your document. Over the Internet, you can find websites that specialize in legal forms. These sites may allow you to download their power-of-attorney forms.

2. Decide which type of POA you need. Your general options are the general and limited powers of attorney. The first type grants an attorney-in-fact an unlimited control over your finances or health care without a predetermined period. In contrast, the second type is limited to only a certain kind of financial responsibility.

3. Be wary of the risks involved in granting another person the power to manage your finances. Remember, by creating a POA, you authorize your agent to use your name in carrying out his or her tasks such as preparing and filing tax returns, borrowing money from the bank, and collecting your social security benefits. With a POA in his or her hands, your agent can make financial, health care, and other legal decisions on your behalf. That being said, you must educate yourself about the risks as well as the responsibilities involved with a POA before you start the paperwork.

4. Start writing the document. List all the reasons and the scope for granting POA to your agent. You will need these details when you consult with a lawyer who will decide the right type of POA to use in your case.

5. Include all your assets and liabilities in your document. Make sure that your power-of-attorney form properly documents all the necessary information that can guide your agent in making the right legal decisions for you.

6. Talk to a lawyer. It is recommended that you consult a lawyer to avoid conflicts or hassles in the future. The lawyer can draft the legal document and inform all the parties involved about the rights and duties stipulated in it. Once the draft is done, the lawyer will keep a copy of the document that will come in handy should legal disputes arise in the future.

7. Sign the document. All the parties, including at least two independent witnesses, must properly sign the form. The form should also be notarized before it can take effect.

The power of attorney is an indispensable legal document that gives you a peace of mind that all your assets are taken care of when you become mentally incapable of making decisions for yourself. You can also prepare one for your elderly family member or relative who has a serious disease or medical disability. In such case, you have to make clear of the person’s needs and goals and specify them properly in the document.