You’ve likely heard the term power of attorney before, but do you know what it is or why it’s important? To simplify it, a power of attorney (POA) gives someone permission to make decisions for you. That person, called an agent, can make medical, financial, or other major decisions for you if you can’t do it yourself.
There are several kinds of POAs. Choosing the right one can be a little confusing. Before you decide which type of POA is best for your goals, you need to understand the available options.
What a Power of Attorney Does
The person who acts as your power of attorney is called a fiduciary. That means that they are someone who manages the affairs of another person. Your agent’s powers vary based on the kind of POA you have in effect.
Basically, the POA will act on your behalf if you become incapacitated and can’t act for yourself. Decisions the POA can make can be health-related or financial, and more again depending on the type of POA chosen.
Kinds of Power of Attorney
There are several kinds of POAs, so you need to understand the differences between them to be able to choose the right one for yourself.
- General Power of Attorney: this gives very general powers to act on your behalf. This is the kind of POA you need if you become suddenly mentally or physically incapacitated.
- Financial Power of Attorney: this gives the agent authority over financial matters. It’s another name for a general power of attorney.
- Special Power of Attorney: this allows you to specify what powers you are letting your agent exercise. Typically, these are used when you have health-related issues or other commitments.
- Healthcare Power of Attorney: this allows your agent to make health and medical decisions for you. Anyone over the age of 18 should have a healthcare power of attorney.
- Durable Power of Attorney: this is a different kind of financial POA. The durable power of attorney should stay intact if you are incapacitated. Good for those who are concerned about suddenly becoming incompetent because of an accident or illness.
- Springing Power of Attorney: this is also known as a conditional POA. It only goes into effect when you become incapacitated. This gives you a contingency without giving control now. However, you are likely to be required to provide proof of incapacitation.
Do You Need a Power of Attorney?
Any legal adult should consider having a POA. College students, new parents, people who just retired, business owners, and those who just received a life-changing diagnosis need to consider a POA. Your age, mindset, and future life goals are some of the factors determining which POA you need.
Steps to Getting a Power of Attorney
Getting a POA is relatively simple. There are some slight differences in the process depending on which kind of POA you want. Many states offer standardized forms for creating your POA. Banks and other institutions will be familiar with these standardized forms.
Follow these steps to obtain your Power of Attorney.
- Decide which POA is the best for your current situation.
- Choose the agent for your POA.
- Create your power of attorney on NCEstatePlans.com or with your local attorney’s office.
- Sign your POA in front of a notary to make it legally binding.
When you create and sign your POA, you must do it in such a way that it’s useful and binding. You keep the original, and your agent should get a copy of the POA if it needs to be in use currently. Many people sign more than one type of POA and keep them for later in life.
If the POA is a just-in-case document for later use, you should store the original copy and let your agent know where it is and how to access it. Your options are to store it in a safety deposit box, give your agent a key to the safety deposit box, and make the bank aware that your agent has access. You might also store the POA in a fire-safe container at home, but your agents will need access to your home and the storage location to access the POA when necessary.
A power of attorney is a valuable document to have in case you become incapacitated at any point in time. You name the agent or agents, and then you store the original, signed, notarized copy either in a safety deposit box or a safe at home, giving access to your chosen agents.