Let’s cut to the chase: you probably want to ensure your loved ones’ future; to make sure you are taking care of them even in the event that you become incapacitated. Or even if you’re unable to manage your own affairs. In this case, it’s important to understand what types of powers of attorney exist and how they work. With this article we discuss the most common types of power of attorney. We help you choose the best one for you!
What are the most important types of power of attorney?
There are several types of power of attorney that can be used to delegate authority to someone else. In this article, we’re going to discuss the five most commonly used types: Durable, Springing, General, Special and two examples of that, a Health Care and a Financial power of attorney. Keep in mind that there’s no clear way of saying which one is better. It entirely depends on your needs. Let’s have a look at them case-by-case.
Durable power of attorney
Durable power of attorney allows you to appoint someone to make important decisions for you if you become incapacitated. It doesn’t matter if this document went in effect before you were incapacitated. It’s legal effect holds on even after you can’t speak your mind. That’s why this type is useful in estate planning.
A non-durable power of attorney isn’t particularly useful for estate planning instead. It only covers the ability to handle your finances up until the time.
Examples of durable and non-durable power of attorney
Imagine that Alice has given Bob temporary access to her money. This way he can pay off some debts on his own behalf. At the same time he’s still allowing Alice autonomy over her own finances. They make this arrangement in writing and they both sign it. This would then be a non-durable power of attorney.
However, let’s say Bob continues handling Alice’s financial matters after she became incapacitated. Also she hasn’t appointed anyone else by then. Their agreement is also on paper. This would then be a the durable power of attorney.
Springing power of attorney
A springing power of attorney is a special type of power of attorney. It gives your agent the power to act but only when a specified condition is met. For example, you can give your agent the authority to make financial decisions for you. That could be at any time in the future, but not until something happens.
In estate planning, this can be useful because it allows someone else to step in and take over. That’s comes in handy if you become incapacitated due to dementia or other conditions that might impair your ability to make decisions. This also includes Alzheimer’s disease since you often can’t understand what’s going on around you.
Example: A child has their parent sign a springing power. They will only gain access after their mother can’t make decisions any more. The goal is that they then can manage her affairs and assets.
General power of attorney
A general power of attorney allows you to designate someone else to make financial and other personal decisions for you.
With a general power of attorney, you authorize your agent to act for you in all situations allowed by local law. For example, with this kind of legal document someone else could pay all your bills. They could even transfer funds from one account into another one or sign checks on your behalf. In some states (and countries), there are limitations on this. Specifically, on what types of transactions a general power of attorney can authorize. You should consult an experienced estate planning attorney if you have specific questions about your state.
One benefit of such documents: They are useful for seniors and other vulnerable populations who may not be able to manage their affairs. These people can then retain some control over their finances even when they cannot manage those matters personally themselves.
Special power of attorney
Special power of attorney is a document that gives your agent authority to act on your behalf regarding certain subject matters of your choosing. For example, let’s say you have an elderly parent who is unable to pay their bills. Or maybe the don’t have access to a computer or phone. Then you may want to create a special power of attorney for financial management. Another example could be if you are going through some difficult times. You may then need someone else to manage your finances until things get back on track.
Sometimes you can also use special powers in connection with business transactions. This may include buying real estate or opening bank accounts. You can even give authority over specific assets like bank accounts or stocks. Make sure you fill out the right paperwork at the right time.
What are the benefits of a special power of attorney? Special Powers help individuals who need assistance with financial decisions due to age or health reasons (and sometimes mental illness). They can maintain control over their own affairs without having someone else manage every aspect of their lives for them. Special power of attorney also provides limited authority which you choose.
Financial power of attorney
A financial power of attorney lets you appoint someone to manage your finances if you become unable to do so. This person is an agent or attorney-in-fact and they make decisions about your money and property. For example, if you are sick in the hospital, your agent can pay bills.
It’s important that you choose someone who understands what is important for you as a person. They should also have the experience necessary to manage your finances. You should choose someone reliable and trustworthy; otherwise, they may misuse the authority of the power of attorney document.
Health care or Medical power of attorney
A health care or medical power of attorney is a special type of power of attorney. You can use it to give someone the authority to make medical decisions on your behalf. You may have also heard of it as a health care proxy or advanced directive.
This document is very important and you should have it in place before you need it. Every estate plan should at least a version of such document. If you don’t want to be legally biding but more of a suggestion, we have just the thing for you. Myend’s own advanced health care directive will do just that!
How to choose a power of attorney
Choosing the right power of attorney is an important decision. You should choose a power of attorney that is appropriate for your situation. It’s important that you feel comfortable with your decision. It should also be easy to read and understand, which can help prevent problems down the line. Think about your wishes, but also your loved ones!
We hope that this article has helped you understand the different types of power of attorney available. It’s important to know they all have their advantages and disadvantages. In general, we recommend a durable power of attorney but for the rest you’ll have to find out for yourself.
Myend offers the perfect estate and end-of-life planning for all! Have a look here to learn more. And if you’re ready for action, sign up today for your free account! The estate planning of the future is here today.