What is a “Power of Attorney”? What are the different kinds?
For many people the term “power of attorney” (or POA for short) can be confusing because it is often used interchangeably in different contexts. To add to the confusion, powers of attorney can operate in different ways and for different purposes. In this blog post we will provide a general overview of the main kinds of powers of attorneys and their differences.
What is a POA?
In general, a power of attorney is a legal instrument that vests authority in another person to act on your behalf. The creator of the document is called the principal. The principal names someone to make choices and act on the principal’s behalf. The person named by the principal is called an agent. A principal can name any competent adult to be an agent. However, for each power of attorney, a principal should name only one person. It is important that only one person be made an agent because that person will be making decisions that can be difficult. It is also important to note that some powers of attorney will name an agent and a back-up agent. The named agent will make decisions for the principal, but if the named agent becomes unable, or unwilling, to fulfill the duties of the POA, the back-up agent may take over.
What is the difference between a durable POA and a regular POA?
An agent under a regular POA can make decisions on the principal’s behalf until the principal is deemed incapacitated or incompetent, at which point, the POA terminates automatically. On the other hand, a durable POA (DPOA) grants power to the agent to make decisions for the principal, even if the principal cannot make decisions on his or her own behalf. This means that if the principal becomes incapacitated or incompetent, the agent still has the power to make decisions for the principal. Usually, an agent acting under a durable power of attorney keeps this power until the principal revokes the POA or passes away.
What is the difference between a durable POA for health care and a durable POA for finances? Why would a person want both?
A durable power of attorney for health care allows an agent to make on medical decisions on behalf of the principal, if the principal is deemed incompetent, or otherwise incapacitated. On the other hand, a durable power of attorney for finances allows an agent to make financial decisions on behalf of the principal. A principal may decide that it makes sense to have two durable powers of attorney if the principal believes that assigning both kinds of responsibility to one agent may overwhelm them, and sometimes a principal has two people the principal trusts and each person is best suited to make only certain kinds of decisions.
If I create a POA for myself, when does it start?
When a principal creates a power of attorney, it’s important to think about when an agent’s power will begin. In drafting a power of attorney, an attorney can help you include language that commences when you want. A power of attorney gives an agent authority to make decisions as soon as the principal signs the document.
Now that you know more about the important differences between the main kinds of powers of attorney, you may have questions about your own POA. Contact an attorney at Kelly & Brand, Attorneys at Law, LLC today to help you create powers of attorney that are personalized to your situation.