You may be new to estate planning and have heard of powers of attorney, but not really understood what they mean. Many people believe that creating a will and testament is enough to make sure that their assets are in the right hands. The last will and testament is only the tip of the proverbial iceberg. Modern estate planning is more detailed and all-inclusive. It aims to benefit you and your family, both during and after your lifetime. More about the author?
A power of attorney allows an individual designate someone else to act in their place when they are in need. Imagine all the times that you had to make decisions on behalf of your family members because they were unable to do so themselves. You probably know how much your children depend on you if you’re a parent. A parent is a child’s security net that keeps them safe.
When a child reaches adulthood, the parents no longer have control over their life. Who will execute your obligations in the event that you go missing or are incapacitated by an accident? Who will oversee your financial and health-related matters?
Five different types of power of attorney are explained by an Estate Planning Attorney from San Francisco, CA.
1. Durable Powers of Attorney
A durable power of attorneys allows you to appoint an agent who will co-manage your affairs with you. The agent can act on your behalf in the event of your incapacitation. As long as you’re in good health, you retain control over your finances and healthcare. Normaly, a power of attorney becomes effective the moment you sign it, but you can conditionally transfer power. If you become incapacitated, you can select the person you want to act on your behalf. The powers of attorney can be revoked, that is. They can be revoked or changed at any time. Your power of attorney will expire upon your death.
2. Power of attorney that is not durable
Agents nominated to act under a non-durable Power of Attorney can only do so while you’re still alive. If you die or become incapacitated, their powers will cease. If you are in a coma for example, the person with durable powers of attorney will be able to make medical and financial decisions on your behalf. A person designated with non-durable power of attorney cannot act on your behalf if you are unconscious.
3. General Power of Attorney
General powers of attorney are also called financial powers of attorney because the agent is given control of several economic issues of the estate. The agent’s responsibilities and sanctions include paying bills, signing contracts, purchasing/selling real estate, managing transactions, investing, collecting revenue, compensating creditor, and maintaining the estate.
4. Medical Power of Attorney
You can decide who will be responsible for your care if you are clinically deemed mentally incapacitated or compromised by a medical power of attorney, or advanced medical directive. This person will decide what medical treatments or procedures you’ll receive while incompetent. The person granted this power has the final say in all medical matters, including organ donation and artificial life support.
5. Limited Power of Attorney
A limited power of attorneys allows the agent you designate to act in your place for a specific objective or situation. You can create multiple limited powers of attorney, each with different duties and powers. This type of power can be terminated after a certain time or at the completion of its purpose.