A power of attorney (POA) is a type of legal document that grants certain powers or authority to your chosen agent so that they can make decisions on your behalf under very specific circumstances.
They’re very commonly used by people for various reasons – and they can be an important part of estate planning – but not all powers of attorney are the same. Learning more about your options with these important tools can make it easier to decide when they may suit your needs. Some of the basics include the following.
A limited power of attorney
This type of POA grants your agent very specific (and narrowly defined) powers for a particular transaction or purpose. Limited powers of attorney are often used in situations where the grantor wants to delegate authority for a specific task without giving their agent broad, ongoing powers. For example, you might give a limited power of attorney to your son for the specific purpose of managing the sale of your home. It would grant your son no greater authority over your finances and would end as soon as the house is sold.
A nondurable power of attorney
These POAs are typically granted for longer periods – but they only remain in effect so long as you are capable of directing what you want to be done (whether you actively do so or not). If you become incapacitated, the authority of a nondurable POA will automatically end. This sort of POA is typically used when the grantor wants their agent to be able to handle certain things on their behalf for an extended period. For example, you may want your daughter to take over paying your bills or doing your banking because you find the activity to be physically difficult – even though you are mentally capable of handling the tasks.
A durable power of attorney
Once granted, a durable power of attorney starts immediately and stays in effect until you die (unless revoked), even if you become incapacitated. These are typically used to give a trusted relative or friend the ability to make either financial or health care decisions (or both) on your behalf.
A springing power of attorney
Many people are uncomfortable with granting someone a power of attorney that goes into effect immediately. Instead, you may use a “springing” power of attorney. This is a type of durable POA that only becomes effective when you are incapacitated and a doctor has said you are no longer competent. In other words, your POA would not have any authority until you can no longer speak for yourself.
Effective end-of-life planning shouldn’t just address what happens after you’re gone. When approached thoughtfully, it’s also very much concerned with what happens while you’re still alive. Seeking experienced legal guidance can help you create the estate plan you need in this regard.