A Power of Attorney is a written document which gives a person, or persons, of your choice the authority to take actions or make decisions on your behalf. Once you’ve chosen a person (or persons) to help you make important decisions, that person (or persons) is called your “attorney-in-fact”. Your attorney-in-fact may have authority to act in your place for financial or other purposes. It is important to trust this person with your finances.
There are four main types of Powers of Attorney:
∙ Limited: A Limited Power of Attorney grants someone else the power to act on your behalf for a very limited purpose. For instance, if you will be out of town during a time that an important document will need to be signed then you may grant someone a Limited Power of Attorney so that he or she may sign that document as your attorney-in-fact.
∙ General: A General Power of Attorney gives your attorney-in-fact all the powers and rights that you list in the document. It ends on your death or incapacitation unless you rescind it before then.
∙ Durable: A Durable Power of Attorney is similar to a General Power of Attorney, except that it remains in effect after you’ve become incapacitated.
∙ Springing: A Springing Power of Attorney is similar to a Durable Power of Attorney, except that it does not become effective until you are incapacitated.
Failure to have the proper Power of Attorney in place may result in your loved ones having to seek an adult guardianship with the courts before they may legally manage your affairs. This can be a costly and time-consuming process. A properly drafted Power of Attorney should include the necessary provisions and powers to cover future events such as entering into a nursing home and the powers needed to protect your assets.
It’s important that you trust your attorney-in-fact to handle your affairs as you would. If circumstances have changed between you and your attorney-in-fact since your document was originally drafted then you should consider having your Power of Attorney document updated.
As you review your estate planning documents, I strongly suggest that you confirm that a proper Power of Attorney has been drafted for you. I also suggest that you name an alternative attorney-in-fact in case your primary attorney-in-fact is unable to act on your behalf.