Power of Attorney – Different Types
A “power of attorney” is a legal instrument, which grants another person the authority to act as your legal representative, and to make binding legal and financial decisions on your behalf.
Types of Powers of Attorney
There are two types of powers of attorney. A “general” power of attorney is unlimited in scope and duration, and permits the named individual to act as your legal representative in relation to financial matters until such time as it is revoked.
A “specific” power of attorney imposes limits upon the named representative, and may restrict the scope of that person’s powers to a single type of conduct or a single transaction. For example, the representative might be used to sign the contracts on a real estate transaction or to deal with financial commitments while abroad.
It is possible to have a duration on the time a Power of Attorney is affective. Stop date can be drafted in to the document and will prevent the abuse of the power.
Power of attorney’s do not have to be registered with the state. However, if a power of attorney grants somebody the right to engage in transactions relating to real estate, it may be necessary to record the form.
Terminating a Power of Attorney
The Power of Attorney can be terminated at any time and the process can be instant, in all that has to be done is destroy the original powers of attorney and any copies and inform the attorney that the Power of Attorney no longer exists.
When Does a Power of Attorney Become Effective?
A Power of Attorney will become effective at the time it is signed. However there are some Power of Attornies that can be become effective on a future date or upon a specific event.
Planning for Medical OR Mental Incapability
A Power of Attorney is sometimes made in anticipation of a medical or mental emergency or incapability. You may find that you are in a position where you are unable to articulate your own wishes, a medical power of attorney allows you to choose in advance who will represent your interests, and can impose upon them the restrictions you wish. You may want the Power of Attorney to be used in conjunction with a Living Will where the Attorney uses the instruction from the living will to carry out and deal with the financial transactions using the Power of Attorney.
Most people who engage in estate planning in anticipation of possible incapacity or disability obtain both a medical power of attorney and a general power of attorney. This usually allows a trusted person to take care of your finances. As with the medical power of attorney, if there is a lack of any specific instructions the court will appoint somebody to represent your interests.
Please note that powers of attorney issued for the purpose of managing your assets in the event of disability or incapability are always drafted with an indefinite time period and are known as “durable” powers of attorney. Many financial institutions are reluctant to accept or rely upon powers of attorney, which expire after a specific date, and some will refuse to accept them.
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