A Power of Attorney is a very common form of agency. It allows someone (the agen

Question

A Power of Attorney is a very common form of agency. It allows someone (the agent) to act on behalf of someone else (principal) for his/her benefit. Perhaps you have a Power of Attorney over your spouse, parents, grandparents, either for financial or health care.  Describe a Power of Attorney and it's differences from other types of agencies (what are its requirements, why might you use it, how do you terminate it). Be sure to include the statement that should be on every power of attorey and why that statement is important.

Explanation / Answer

General Power of Attorney

A general power of attorney is typically used to allow your agent to handle your affairs during a period of time when you are unable to do so. For example, when you are traveling out of the state or country or when you are physically or mentally unable to handle your affairs. A general power of attorney is often part of an estate plan as well.

Powers usually include the ability to:

•     Buy and sell property

•     Buy, manage or sell real estate

•     Handle banking transactions

•     Enter safety deposit boxes

•     File tax returns

•     Tend to government benefits

•     Enter into contracts

•     Purchase life insurance

•     Settle claims

•     Exercise stock rights

The following are optional powers that can be granted to your agent:

•     Maintain business interests

•     Make transfers to revocable living trusts

•     Hire professional assistance

•     Make gifts

A power of attorney is a legal document that allows you to appoint another person to take control of your affairs should you become unable to effectively do so. The person appointed becomes the agent, or attorney-in-fact, and the person who appoints is known as the principal. There are various types of powers of attorney and the one that you choose depends on the requirements of current situation.

Non-Durable Power of Attorney: The non-durable power of attorney is used only for a set period of time and usually for a particular transaction in which you grant your agent authority to act on your behalf. Once the transaction is completed, or should the principal become incapacitated during this time, the non-durable power of attorney ceases.

Durable Power of Attorney: The durable power of attorney is much more encompassing than the non-durable power of attorney and it can be used to allow an agent to manage all the affairs of the principal should they become unable to do so. It does not have a set time period and it becomes effective immediately upon the incapacitation of the principal. It does expire upon the principal’s death.

Nominating a Power of Attorney with the Help of a Power of Attorney form or Template: A power of attorney template or Power of Attorney form can be used to nominate a power of attorney to represent an individual and their affairs in several different areas should they become incapacitated.

Special or Limited Power of Attorney: A special or limited power of attorney is used on a limited basis for one-time financial or banking transactions, or for the sale of a particular property. This is most often used when the principal is unable to complete the transaction due to prior commitments or illness and wants to appoint an agent to act on their behalf. The agent has no other authority to act on behalf of the principal other than what is assigned to them in the limited power of attorney.

Medical Power of Attorney: The medical power of attorney grants authority to the agent to take specific control over the health care decisions of the principal should they become incapacitated or unable to do so. This usually takes effect upon the consent of the presiding physician and it allows the agent to authorize all medical decisions related to the principal.

Springing Power of Attorney: A springing power of attorney becomes effective at a future time and only when a specific event occurs, such as the incapacitation of the principal or a triggering event that occurs while the principal is out of the country and unable to act upon it. This type of power of attorney can be durable or non-durable and can encompass any number of affairs the principal wants to assign to the agent.

Regardless of your circumstances, there is a Power of Attorney form that can be crafted specifically for your needs. This is a valuable tool to assist people with any legal requirement. Whether it be assuming control of their affairs because of incapacitation or taking charge of a business deal that a principal cannot attend because of other commitments, the power of attorney form allows people the flexibility and security to know their affairs are being looked after in a responsible manner.

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