-Which Power of Attorney Best Protects Your Interests When Incapacitated or Unable to Act/ Decide?
A power of attorney represents the foundation of your disability plan. It is the legal document that lets you delegate your rights permitting a trusted party/ an agent the rights to conduct almost all kinds of businesses and financial transactions (management, investment and spend on assets) without any legal restraints. The selected agent could also be responsible for making healthcare decisions on your behalf, not to mention caring for your children. The agent takes up these roles should you be unable to perform them effectively.
Given the delicate nature of the roles delegated to the agent, choosing an agent calls for careful evaluation of the person’s competence and trustworthiness. But, even after settling on an agent, you want to control the power they get over your affairs. Having one party controlling everything might not be the best idea hence the different types of power of attorney.
Durable Power of Attorney (POA)
This is a POA that grants an agent the power to continue running a business or making health decisions on behalf of the principal after the principal is incapacitated and unable to make sound decisions on their own. In this case, the POA isn’t limited by the principal’s future mental incapacity.
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The two important situations that the durable POA applies include:
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When you (the principal) wish for the agent to have authority over your affairs after you are incapacitated.
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If you wish for the POA only to take effect immediately, and when you wish for the directives of the document to remain effective regardless of future disability.
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For the effectuation of this legal directive, the principal is legally required to specify the list of delegated powers to the agent, as well as the date that the directives are expected to be effectuated. It should also be noted in the POA that the agent should act with the principal’s best interests at heart.
Note that the powers of the durable POA cease to hold any authority upon the principal’s death – the POA cannot address matters relating to inheritance. Besides death, the durable POA ceases to be effective should the principal revoke it (without coercion), if the court invalidates the POA, if there is no agent to serve the POA directives, or is a divorce ensues where the spouse is an appointed agent.
Non-Durable POA
While the durable comes into effect immediately after the principal is incapacitated, the non-durable POA is rather temporary as it’s only established for a specific duration or use in a particular event. For example, if you are unable to attend a meeting and your partner can, you could grant them your POA. The best bit with this document is that the power takes effect immediately the POA is signed, and the power terminates when they perform the task they were tasked to perform or on a specific date. The principal doesn’t have to die or revoke this POA for the powers of the POA to cease being effective.
General Power of Attorney
This is a legal instrument permitting an agent to run all financial or business transactions with the assets of the principal, without restraints. Unfortunately, this is often a risky move, hence the need for due diligence when appointing an agent. The principal also needs to practice vigilance over the transactions conducted by the agent on their behalf.
Medical POA
This POA grants an agent the authority to control and make specific decisions regarding the principal’s health, in the event of the principal’s incapacitation – mental or physical. The health directives issued by the principal to the agent only take effect after the presiding judge gives consent, allowing the agent to decide on behalf of the principal. The agent has to make the tough end of life or life-sustaining decisions when the principal is unable to.
Springing Power of Attorney
If you are signing a springing power of attorney form, it means that you are signing a legal document that will give someone else authority over your affairs should a specific event occur. The effectuation of the POA will spring from a specific event taking place such as incapacitation. A springing POA can be durable or non-durable.
Limited/Special POA
This is a legal document that permits an agent to do something on behalf of the principal as a one-off transaction. Limited POAs include the ones for the sale or property, facilitation of a banking transaction, or care of a child, among others — the agent acts when the principal is unable to. These powers are revocable at any time following the issuance of a written revocation notice to the agent by the principal.
To reiterate what we mentioned above, granting another authority over your affairs is a risky affair. You should, therefore, be careful with who and how you grant power over your personal and business affairs.
To start filling out a free power of attorney form, click here.