A power of attorney lets you, the "principal," choose a trusted person or organization to handle your financial, legal or health care matters if you're unavailable or unable to manage them for yourself. The person or organization you choose to act on your behalf is known as your "attorney-in-fact" or "agent."
A power of attorney must be signed by the person granting the authority and that person must be mentally competent at the time of the signing in order to make the document legally binding.
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Different Types of Powers of Attorney
There are different types of powers of attorney:
- General power of attorney
- Limited power of attorney
- Health care power of attorney
All powers of attorney terminate on the death of the principal.
Additionally, you can revoke or cancel your power of attorney during your life. To revoke your power of attorney, notify your attorney-in-fact in writing that the power of attorney is revoked. Also, notify any person or institution where your attorney-in-fact was used of the revocation. Another way of revoking your power of attorney is to specify in the power of attorney document that it expires on a certain date.
General Power of Attorney
A general power of attorney 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. Good examples are when you're traveling or if you're physically or mentally unable to handle your affairs.
A general power of attorney is commonly used to allow another person to handle the following types of transactions for you:
- Banking transactions
- Entering safety deposit boxes
- Buying and selling property
- Purchasing life insurance
- Settling claims
- Entering into contracts
- Exercising stock rights
- Buying, managing or selling real estate
- Filing tax returns
- Handling matters related to government benefits
Limited Power of Attorney
A limited power of attorney, sometimes called a "special" power of attorney, authorizes your attorney-in-fact to act on your behalf only in specific situations. A limited power of attorney allows you to give only specific powers to the person or organization you appoint as your attorney-in-fact. For example, you could authorize someone to sell a specific item for you, such as a house.
Health Care Power of Attorney
A health care power of attorney allows you to appoint someone to make health care decisions for you. A health care power of attorney is different from a living will, which only allows you to express your wishes concerning life-sustaining procedures.
Having a health care power of attorney doesn't cancel your right to give medical direction to physicians and other health care providers when you're able to do so. A health care power of attorney only becomes effective when you don't have the capacity to give, withdraw, or withhold informed consent regarding your health care.