Identifying a trustworthy agent is an essential part of executing a power of attorney.
Given how essential it is, the question 'What is power of attorney?' comes up surprisingly often
What is power of attorney, and why is it so important? Although its name might suggest otherwise, power of attorney doesn’t mean the recipient would be considered a lawyer afterward. However, the person designated with this distinction does get certain abilities, or powers. Power of attorney is a legal document that allows you, the principal, to designate another party, the agent, who you wish to act on your behalf.
The extent of the powers granted by this document can vary based on what you’re hoping to achieve. The range of functions that can be served via a power of attorney (or POA) means the document can prove vital for a number of different scenarios. People who should look into power of attorney include:
- A person who has been diagnosed with a debilitating illness
- Someone who needs to sell a home, but who won’t be in the area for some time
- An individual who does not have close family and who will be undertaking major surgery in the near future
- A business owner who doesn’t have a spouse
Although all POAs serve the purpose of enabling someone else to manage your affairs if you become incapable of doing so yourself, they can be very unique from one to the next. The different types of POAs offer agents differing levels of control, and identifying the right variation for you requires that you analyze your situation.
Understanding the types of power of attorney
The question: “What is power of attorney’s purpose” doesn't have a single answer. The document you ultimately use should be centered around your intentions. The specifics of your circumstances will also determine which type of POA you use – the possible variations, and their functions, are as follows:
- General power of attorney – General POAs, as can be gleaned from the name, tend to cover a broad spectrum. The powers granted by them to agents can include business transactions, employing professionals, settling claims, and financial transactions. This power of attorney variation is well-suited for people who need someone to handle their affairs while they are away. It’s also a solid choice for individuals who aren’t sure they will be capable of managing things on their own in the future.
- Healthcare power of attorney – Also known as a healthcare proxy, medical POAs empower your selected agent to make medical decisions on your behalf in the event that you lose the ability to do so for yourself. Although this isn’t technically a living will, a healthcare proxy can potentially be combined with one in order to cover your medical concerns, if permitted by local laws.
- Special power of attorney – Special POAs are unique from the others, largely because of their adaptability. With this form of power of attorney, the principal can specify which powers will be granted to the agent. This level of control over the document makes it a good fit for instances where you might need assistance with handling certain affairs but not others. Examples of special POA agent functions include debt collection and real estate management.
- Durable power of attorney – If you have a power of attorney in effect and your health becomes compromised, becoming mentally incompetent can render your POA invalid. A durable power of attorney allows you to protect yourself from this outcome. Durable POAs are just powers of attorney that contain the durability provision. Alternatively, you can opt for a durable POA that only takes effect once you become mentally incompetent.
Selecting a suitable POA agent
If deciding on the right agent to execute your wishes if needed seems like a big deal… that’s because it is. This isn’t a task you should ever take lightly – regardless of whether the agent you have in mind is a lawyer, relation, organization, or friend, you’ll need to be able to know you can trust them. The ideal agent will be someone who can be relied on to protect your interests and look out for you, without abusing the powers entrusted to them.
Agents are typically expected to keep records of the transactions completed on your behalf. You’ll also need to stay informed of these developments via regular updates, but a third party can be used to review the records if you’re not able. One limitation on what can be granted, is that a POA doesn’t give agents the rights to assets. This aspect of powers of attorney is reinforced by Andrea, a Lawyer on JustAnswer:
“A Power of Attorney does not give the Attorney in Fact title to any of the Principal's property or assets. It merely gives authority to conduct the affairs of the Principal,” she says. “In fact, because this creates a fiduciary relationship between the Principal and the Attorney in Fact, the law expressly prohibits an Attorney in Fact from transferring title to any property owned by the Principal to themselves.”
If you have a trustworthy prospective agent in mind, but they’re worried about taking on so much responsibility, you can set their concerns at ease. When it comes to the extent to which agents are legally liable for the actions they perform as part of their POA-granted duties, only intentional wrongdoing will be held against them. Having good intentions will protect agents from consequences, which should be all the reassurance they need – if you’re picking someone you can trust.
- Multiple agents can be appointed, if you want more than one person for the job. This can ensure better decision-making, but it may also lead to delays resulting from disagreements.
- You can draw up a power of attorney without a lawyer, but you still might wish to consider seeking guidance from one. If you’re uncertain about something, be it the powers you’re granting or the agent you’re considering, consulting an attorney is a good idea.
Revoking a power of attorney
Any power of attorney can be revoked – even the durable types! In fact, both general and limited POAs can be limited in their duration, based on parameters set in the documents themselves. When it comes to durable powers of attorney, Alexia, a Lawyer on JustAnswer, explains: “Even a 'durable" POA can be limited expressly for a set amount of time.”
To revoke an existing power of attorney, you need only notify your agent in writing, in addition to retrieving any and all copies of the POA. You’ll also need to notify whichever offices and institutions are applicable to your document. Additionally, a power of attorney will become void in the event that the principal or agent die.
Most of us will need a power of attorney at some point in our lives. Whether it's due to illness, old age or anything else, having the protection of this document in place is essential for anyone who might become unable to make their own decisions. Understanding what a POA can and can’t do is vital, and once you know what they’re capable of, you’ll be better equipped to create one that can take care of your assets when you can’t. To learn more about the answer to the question: “What is power of attorney”, or to learn how best you can utilize POA forms, reach out to the Experts on JustAnswer today.
Do you have experiences with matters concerning power of attorney? Do you have advice you’d like to share with less experienced people on the subject? Feel free to do so in the comments below!