Incapacity Planning - Powers of Attorney
Powers of Attorney
A power of attorney appoints someone you trust the ability to act on your behalf. The person or organization they choose to act on their behalf is known as the "attorney-in-fact" or "agent." All powers of attorney terminate on the death of the principal and may be revoked by the principal before death.
1) For Healthcare Decisions
A healthcare power of attorney allows you to appoint someone to make health care decisions for you. Having a healthcare power of attorney doesn't cancel the right of the principal to give medical direction to physicians and other health care providers when they're able to do so. A healthcare power of attorney only becomes effective (springing power) when the principal doesn't have the capacity to give, withdraw or withhold informed consent regarding their health care. (Discover the most common problems retirees face, and what they can do to solve them The Top 3 Retiree Worries (And What To Do About Them).)
2) For Asset Management
Asset management only is generally a durable power of attorney (see below) and because the power is limited to asset management only, is called a limited durable power of attorney.
3) Durable Feature
A durable power of attorney allows the attorney-in-fact to exercise the powers given to them even after the event of incapacitation. Durable is the legal term used to describe a power of attorney that remains in effect if you become incapacitated. A non-durable power of attorney automatically terminates if you become incapacitated. (Learn more in Advanced Estate Planning: Using Trusts.)
4) Springing Power
An alternative to creating a durable power of attorney is a springing power of attorney. A springing power doesn't go into effect until the principal becomes incapacitated. This type of power is used because some people feel uncomfortable sharing absolute power with another person while they are still healthy.
5) General or Limited Powers
A general power authorizes your attorney-in-fact to act on your behalf in a variety of different situations. A general power of attorney is usually used to allow your attorney-in-fact to handle all of your affairs when you are unable to handle them, but without a durable feature this prevents an attorney-in-fact from acting when the principal is incapacitated.
A limited power authorizes your attorney-in-fact to act on your behalf only in specific situations.