Understanding the Types of Power of Attorney

A power of attorney is a legal document that allows you, the principal, to assign a person or organization, the agent, to manage your affairs, from financial to medical decisions. While many people underestimate the need for these documents, a power of attorney is a useful tool for everyone. If you are going on a vacation, having a surgery, live alone or don’t have a care in the world, a power of attorney can protect your assets if you become unable to yourself. Therefore, to understand the value of a power of attorney, it is best to learn about the types and how they can benefit your situation.

General

A general power of attorney provides the most freedom for an agent to act on behalf of a principal. They can open financial accounts and manage assets without the principal’s consent. However, this power of attorney arrangement is eliminated if the principal becomes incapacitated, passes away or revokes the agreement.

Durable

A durable power of attorney likely takes effect immediately after it is recognized and notarized by the courts. Therefore, a principle allows the assigned agent to act on their behalf in either financial or medical matters, depending on the stipulations in the power of attorney agreement. Also, the agent continues to act on behalf of the principal even after they become incapacitated.

Limited or Special

A power of attorney does not have to be given over the principal’s entire estate. A limited or special power of attorney is designated to another person who will act on behalf of the principal over specific aspects of an estate. For example, a person may be granted a temporary and limited power of attorney, allowing them to sell a piece of real estate on behalf of the principal.

Springing Durable

A springing durable power of attorney, while similar to a durable power of attorney, does differ in a few ways. This document only takes effect after a specified event. Therefore, unlike a durable plan, the springing durable is only valid when the principal becomes incapacitated or is unable to advocate on their own behalf.

A power of attorney is a way to ensure that your assets and your wishes are honored, even if you are unable to make decisions. Therefore, while you may not feel the need to have a designated agent at the moment, you may want to discuss your assets with an experienced estate attorney to make sure you are protected in any potential situation.

 

Source: Estate Planning Lawyer Memphis, TN, Wiseman Bray, PLLC

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