WHAT IS POA?
A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor (of the power). The one authorized to act is the agent, attorney, or in some common law jurisdictions, the attorney-in-fact.
Formerly, the term “power” referred to an instrument signed under seal while a “letter” was an instrument under hand, meaning that it was simply signed by the parties, but today a power of attorney does not need to be signed under seal. Some jurisdictions require that powers of attorney be notarized or witnessed, but others will enforce a power of attorney as long as it is signed by the grantor.
The main body of this article addresses only the legal position of such a power in the United States of America. For the legal status of this type of power in other English-speaking countries, see section 6 below.
A power of attorney (POA) is a legal document giving one person (the agent or attorney-in-fact) the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal’s property, finances or medical care. The power of attorney is frequently used in the event of a principal’s illness or disability, or when the principal can’t be present to sign necessary legal documents for financial transactions.
A power of attorney can end for a number of reasons, such as when the principal dies, the principal revokes it, a court invalidates it, the principal divorces his/her spouse who happens to be the agent or the agent can no longer carry out the outlined responsibilities.
Conventional POAs lapse when the creator becomes incapacitated, but a “durable POA” remains in force to enable the agent to manage the creator’s affairs, and a “springing POA” comes into effect only if and when the creator of the POA becomes incapacitated. A medical or healthcare POA enables an agent to make medical decisions on behalf of an incapacitated person.
WHY IS IT REQUIRED?
Certain circumstances may trigger the desire for a power of attorney (POA) for someone over the age of 18. For example, someone in the military might create a POA before deploying overseas so that another person can act on their behalf should they become incapacitated.
Incapacity isn’t the only reason someone might need a POA, though. Younger people who travel a great deal might set up a POA so that someone can handle their affairs in their absence, especially if they have no spouse to do so. However, POAs are most commonly established when someone is elderly or if they face a serious, more long-term health crisis.
If you have a POA and become unable to act on your own behalf due to mental or physical incapacity, your agent or attorney-in-fact may be called upon to make financial decisions to ensure your well-being and care. For example, they may need to pay bills, sell assets to pay for medical expenses, and take steps for Medicaid planning for you.
Other important tasks a POA can authorize someone to carry out are banking transactions, real estate decisions, dealing with government or retirement benefits, and healthcare billing.
DIFFERENT TYPES OF POA
- DURABLE POWER OF ATTORNEY (DPOA)
A durable power of attorney, or DPOA, is a legal document designed to protect aging parents’ independence and decision-making, while also simplifying the eventual transition to elderly care. A durable power of attorney also serves as a safety net in the event of possible physical or mental incapacitation, ensuring that a trusted appointee has the legal right to make important decisions on behalf of another individual.
For aging adults, a DPOA provides peace of mind in knowing that someone they trust will carry out their wishes related to legal and financial matters, as well as medical decisions (provided a healthcare proxy is implemented) should they become unable to communicate their wishes directly.
- SPECIAL POWER OF ATTORNEY (SPOA)
A special power of attorney is a legal document that authorizes one person, called an agent or an attorney in fact, to act on behalf of another person, known as the principal, under specific, clearly laid-out circumstances.
Also known as a limited power of attorney (LPOA), a special power of attorney allows an individual to give another person the ability to make certain legal or financial decisions on their behalf.
- GENERAL POWER OF ATTORNEY (GPOA)
A General power of attorney (GPoA) is a legal document authorising one person (called an agent) to act on behalf of another (the principal). The principal grants the agent this authority because he is unable to make the decisions his/herself. This GPoA is not specific in nature and the agent would have the authority to make legal, medical, financial and business decisions (but not real estate). It is irrevocable and the principal must agree to ratify what is done by the GPoA.
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