Understanding the various types of Power of Attorney (POA) can save you from unfortunate situations. Whether you’re choosing a POA to make decisions on your behalf or to help a loved one, understanding what each entails is critical.
Types of Power of Attorney
Limited (or Special) Power of Attorney
A Limited POA provides an individual the power to make decisions for you (or a loved one) on a specified basis. For instance, you may assign someone to sign a critical document while you are traveling. Other instances may include allowing someone to make a single financial decision on your behalf or to cash checks for you. A Limited POA is often specified for a period of time or a specific task. It would be revoked if the named individual were to pass or become incapacitated.
General Power of Attorney
A General POA has the powers most often associated with a Power of Attorney. They have the ability to sign documents, pay bills, conduct financial transactions, etc., on the designated individual’s behalf. It is important to note that an individual does not need to be incapacitated to assign this type of POA. This type of POA does end upon either incapacitation or death unless it is rescinded before then. This Power of Attorney offers the individual broad powers and should be carefully considered.
Durable Power of Attorney
A Durable POA can be general or limited in scope, but the key difference is that it remains in effect until death, even if the individual becomes incapacitated. Without this type of POA, the courts would have to appoint a conservator or guardian for an incapacitated individual. Their General POA would not automatically carry over, allowing the court to assign a different individual. Like all other types of Power of Attorney, this may be rescinded at any time.
Springing Power of Attorney
A Springing POA only takes effect upon a specific event, such as incapacitation. It remains in effect until death (or until rescinded) but does not activate until the defined event occurs. As it does not take immediate effect, it is critical to clearly define the triggering event.
Medical Power of Attorney
Also known as an advance directive, this type of POA provides the named individual with the authority to make medical decisions fon your behalf. While this POA goes into effect immediately, the powers are not granted until a physician declares the individual mentally incompetent.
Conclusion
Choosing the correct type of POA can be confusing and challenging, but it is critical to do so carefully and correctly. For instance, if you were named as a loved one’s General POA, and they experienced a major medical event that ruled them incapacitated, you could lose your powers to assist them. However, if you were named your loved one’s Durable POA, you would maintain your privileges without having to work through the court system.
Our advisors are well-versed on the various types of POA and are can help you understand the differences when evaluating the correct type for your family if the need were to arise or understanding a role you were assigned by a loved one. With that said, your Estate Attorney should be the final authority in this selection. Please reach out to your advisor with any questions regarding Power of Attorney or Estate Planning.
Updated: July 17, 2024
Written: October 15, 2021