A Power of Attorney allows you to designate another person to act on your behalf to handle financial, medical, or legal matters in the event that you are unable to do so, or unavailable. The person that is so designated is referred to as your “attorney-in-fact”. There are different types of powers of attorney: a general power of attorney, a limited power of attorney, a durable power of attorney, a durable power of attorney for healthcare and a springing power of attorney.
General Power of Attorney. A General Power of Attorney allows you to designate an individual to conduct transactions on your behalf, including banking transactions, transactions related to real estate, entering contracts and disposing of or otherwise exercising rights related to stock.
Limited Power of Attorney. A Limited Power of Attorney allows an individual to act in your place only for a specific situation. A Limited Power of Attorney is often used in real estate transactions when one of the parties is unavailable.
Durable Power of Attorney. A durable power of attorney allows your attorney-in-fact to open bank accounts in your name, sign checks for you, make gifts on your behalf, run the daily affairs of your business, and make other very important decisions on your behalf. A durable power of attorney is nearly identical to a regular power of attorney, with one big difference: a durable power of attorney remains effective even after you suffer a disability. A regular power of attorney ceases to be effective if you become disabled.
Durable Power of Attorney for Healthcare. A Durable Power of Attorney for Healthcare grants your attorney-in-fact the right to make decisions regarding your medical care in the event that you are unable to do so due to unconsciousness or mental incapacity. (The Durable Power of Attorney for Healthcare can be incorporated with the Durable Power of Attorney (for financial and legal matters) if you desire to use the same attorney-in-fact for both, or can be two separate powers of attorney if you desire to have separate attorneys-in- fact).
Springing Power of Attorney. A Springing Power of Attorney allows you to designate a time in the future (most often on disability) when the Power of Attorney will become effective. A Springing Power of Attorney is often used in the event that an individual does not feel comfortable with immediately having someone able to act on his or her behalf as attorney-in-fact.
A Durable Power of Attorney is preferred. A properly drafted Durable Power of Attorney will help protect you in the event that you suffer an accident, injury or illness that leaves you unable to handle your personal, legal, medical or financial affairs. In the event that you suffer an accident, injury or illness that leaves you unable to handle your affairs, and you do not have a properly drafted Durable Power of Attorney in place, it is likely that your loved ones will need to go to court to have a guardian appointed for you, which can be very expensive.