A power of attorney, or POA, is a legal agreement empowering someone to manage property, financial, or medical affairs on your behalf if you are unable. There are a variety of circumstances when this would become necessary, and there are different POA roles one can hold. You may not have encountered a need for POA yet, or may not be aware of the varying titles and situations. Read on to understand the POA roles one may hold and appoint.
- What does Power of Attorney Mean, and Who Can be Appointed?
- What Risks are Involved?
- Is it Possible to ‘Cancel’ a Power of Attorney?
- Different Kinds of Supervision
- How is Power of Attorney Bestowed?
- For the Future
- Related Articles
What does Power of Attorney Mean, and Who Can be Appointed?
In its simplest terms, granting someone power of attorney allows them to make decisions on someone else’s behalf. This can be done to allow a spouse, family member, or any chosen legal adult to make financial or health decisions if you are unable, say if you are serving overseas and decisions need to be made regarding your bank. The “principle” is the main individual who appoints an “agent” who holds power of attorney. You can continue to act independently of the power of attorney and move about your life, knowing the document would go into effect according to the details of the agreement. It does not take any decision-making away from the grantor while they are of sound mind.
The process is rather straightforward when done in advance, but can be trickier under certain circumstances. For example, when the need arises on an emergency basis because someone is incapacitated, or when it is sought for someone who cannot give consent because of limited capacity. Here are five types of power of attorney.
In the broadest sense, a general power of attorney grants an agent a wide range to act on your behalf. Anything from medical, financial, legal, business or real estate becomes a possibility for general power of attorney. This is the most extensive option, as it grants someone power to act on your behalf in so many ways, so selecting a trustworthy agent is crucial. Many banks do not recognize power of attorney after 10 years, so it is recommended by some to renew these documents periodically to keep them in effect.
Durable Power of Attorney
If a power of attorney document is durable, this means the document is binding even after the grantor becomes incapacitated or disabled. Non-durable, however, implies the opposite, where if the grantor becomes incapacitated the document is no longer binding and the agent loses power of attorney. These would be circumstantially relevant, depending on if the power of attorney document is enacted regarding real estate, for example, or in the event that someone does become mentally impaired, the point of that POA is to make sure decisions are made on the principal’s behalf.
Medical, or Healthcare, Power of Attorney
This is just as it sounds; a medical POA can serve to make health decisions on another’s behalf if they are unconscious, incapacitated, or disabled. It often applies in the context of elderly dementia patients, who may decline in health and are unable to make medical decisions for themselves. When it comes to disability cases, it stems from the individuals ‘decisional capacity,’ or their ability to make autonomous decisions. This is determined on an individual basis, as there is a spectrum of ability and even individuals with similar diagnoses could have varying decision-making ability. Individuals with autism, for example, may fall on this decision-making spectrum, ranging from fully independent to reliant on a guardian for all decisions.
Limited / Special
A special power of attorney has specific abilities signed over to them and powers outlined. This is often used in the circumstance of selling property, debt management, real estate, and general business transactions. This type of POA has an expiration date on it, that being once the specific task has been completed. If that task is cashing checks, for example, it would only extend to that task, and not allow that person access to your full banking information.
Springing, or Conditional, Power of Attorney
Unlike a limited power of attorney, which may have several tasks included, a springing power of attorney goes into effect under a certain condition. This is a “just in case” POA, being triggered by a specific condition. Say you are deployed overseas and need someone to manage a real estate transaction – that circumstance springs the appointed person into POA. It can end at a certain determined time or with death.
What Risks are Involved?
With the appointment of an agent to act on your behalf, you run the risk of that agent acting in ways you would not. You may be displeased with the outcome and have to deal with fallout or the results of their actions. In the case of power of attorney with the elderly, this circumstance has been known to give way to elder abuse. A power of attorney can be charged with not acting in the principal’s best interest, going as far as fraud, misappropriation, forgery theft, breach of fiduciary duty and general mishandling and cruelty towards the grantor.
Unfortunately, if an individual holding power of attorney behaves recklessly on your behalf, you would be held accountable for the actions. If you appoint an agent as power of attorney to make financial decisions while you are out of the country and they sign a contract for a huge sum, you will be bound to this choice. This becomes trickier when a POA is acting on your behalf and you are in a coma or another medically incapacitating situation, but in the event you restore to health, the effects of their decisions remain in effect, as yours.
Is it Possible to ‘Cancel’ a Power of Attorney?
Yes, if you’ve deemed your agent ill-fitting for the role, you can revoke the document and effectively fire the agent as power of attorney. With a written statement that you are of sound mind and are either revoking and/or appointing a new power of attorney, you can inform any institution of the change and update the document. If a power of attorney is charged with abuse or mishandling of the estate, and the grantor is mentally incapacitated and unable to remove the POA themselves, they can be challenged and have power of attorney revoked
Different Kinds of Supervision
Power of attorney is often compared to guardianship and conservatorship, and while there is significant overlap, each is slightly different and may be invoked in certain circumstances. Power of attorney is an estate planning document, empowering an agent to make decisions related to one’s finances or medical needs, while a guardianship pertains more to the guardian aspect.
Like a parent is a legal guardian of their child until 18 years of age, a guardianship extends this. A guardianship is a legal relationship with, empowering the guardian decision-making ability for the individual and their affairs, or “ward,” often in the context of an adult with mental disabilities. As guardianship is quite extensive, it is often an option pursued if power of attorney has failed or come up short. While you get to choose in the case of power of attorney, a judge will make the final call when it comes to appointing someone in a guardianship.
A conservatorship, recently making headlines in relation to pop star Britney Spears, usually comes into effect after the person has become incapacitated, and has to do more with managing the finances and estate of the ward. Conservatorship requires a petition to the court, justifying the need for the arrangement, while a power of attorney does not always require the same petition process. More extensive agreements as a guardian or conservator do require some oversight by the court.
Guardianship, conservatorship and power of attorney are used at different stages of the process depending on state, so the ultimate naming authority lies with the state in which the arrangements are being made.
How is Power of Attorney Bestowed?
Though details may differ state to state, power of attorney is relatively straightforward to establish. After deciding which type of power of attorney to pursue, whether it is durable or non durable, the grantor will need to decide the scope of the document. With the help of a lawyer, frequently an estate planning attorney, the proper power of attorney documents will be written up, determining the POA stipulations. In addition to the state’s written and formalized documents, detailing circumstances and provisions of the POA, the document must be notarized, signed by the grantor, and witnessed by two other individuals.
This is a rather common procedure, as spouses, family members and others in need file power of attorney agreements every day. You can name several people as power of attorney, depending on the type, though some law firms recommend just one per need as it can lead to confusion and disagreement. A parent could grant both children power of attorney, for example, though it could spark disagreement among family members when it comes to making decisions. Power of attorney can go into effect immediately after signing, if necessary, or specified with a specific timeline in the case of limited POA.
For the Future
Legal arrangements can feel mysterious and intimidating at times. Knowing when to enact certain agreements and invoke power of attorney can feel uncertain and scary. Many people do not want to acknowledge the future, or circumstances that would merit power of attorney, but being prepared is the best way to proceed.
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Kate is a writer, wellness enthusiast and fan of puns. Based in the Washington, D.C. area, Kate holds a BA in PR & Advertising and Masters in Leadership in Change (for now, as education is always calling.) She is mother to a perfect dog with an overbite and spends a lot of time learning on TikTok. As a multipotentialite, Kate’s career has spanned social media marketing, university admissions, essay coaching and teaching stand-up comedy. At the root of it all: words.