A power of attorney is a legal document that lets an individual do things and make decisions for you when you are not able to. In such kind of a legal relationship, one party is the principal and the other party is the agent or the attorney-in-fact. The agent is being appointed to do things for the principal. Note that the agent is not necessarily a lawyer, they can be either a friend, or a family member, or even an organization. Let us now go deeper into the 5 things you should know about a power of attorney.
1. Health Care Power of Attorney
As the name of the document suggests, this type of a power of attorney allows the agent to make health-related decisions for the principal. For example, if you are mentally incapable of making medical decisions for yourself, then the agent has the right to do so.
2. General Power of Attorney
This document provides the agent with a variety of powers to act on the principal’s behalf. For example, if you appoint someone as your agent, they will have the following powers:
- Managing your financial issues
- Purchasing life insurance
- Suing on your behalf and settling the claims
- Purchasing gifts
- Employing people
A general power of attorney is usually made a part of an estate plan by many business people since it is really useful to have someone to handle your financial issues whenever you cannot or you are out of the country or your physical/mental condition does not allow you to do it yourself.
3. Special Power of Attorney
If you do not want an agent to manage all your issues, you can choose the so-called special power of attorney. This document allows you to choose the specific things that the agent will be able to do. For instance, you can appoint someone to do the following things when a health condition does not allow you to do it yourself:
- Handling issues with real estate
- Collecting Debts
- Paying taxes
- Selling your property
4. Durable Power of Attorney
The word “durable” is used in this document to make sure that the latter is still in effect even if the principal becomes mentally incapable. In other words, the agent will be making decisions and handling issues in case you get mentally incapacitated regardless of the fact that you can no longer provide them with instructions.
5. Several Agents
Yes, you can have several agents. Having multiple agents can have both benefits and drawbacks. A benefit is that several people can make better decisions and they can check one another’s work to eliminate shortcomings. On the other hand, one agent might disagree with the other one and a delay in making a serious decision might occur.
A power of attorney is a useful document especially for those who live alone. Because these people do not have relatives to make decisions on their behalf when there is a need for that. Note that you must be mentally capable when signing a power of attorney; otherwise, the document will not be considered valid. Also, make sure you have a plan B in place. For example, consider that your agent might get ill or they might not be able to complete their duties. So, it’s a good idea to have a backup plan.
