If you execute a power of attorney, you are referred to as the principal or grantor. You name an agent or attorney-in-fact when you are creating the device. The agent is empowered to act on your behalf in a legally binding fashion.
There are different types of powers of attorney, and we will explain them in this post.
General Power of Attorney
When you grant a general power of attorney, you are giving the agent a wide range of latitude to act on your behalf. In a real sense, the agent can act for you to enter into just about any type of legally binding arrangement that you can enter into on your own.
This is a lot of power to grant to an agent, but it may be necessary under certain circumstances. If you are simply unable to act for yourself over a wide range of circumstances, you may need a general power of attorney.
Clearly, you must be discerning when you are choosing someone to act as an agent under a general power of attorney.
Limited Power of Attorney
There is also a power of attorney that is called a limited power of attorney. This type of POA is somewhat self-explanatory: when you grant a limited power of attorney, the agent has the ability to act on your behalf on a limited basis.
For example, let’s say that you are doing business in London for a couple of months. You want to consummate a real estate transaction in Jackson Hole, Wyoming. It is time sensitive, and documents must be signed while you are in London.
You could give the agent the ability to act on your behalf for this single transaction.
This is just one example, but you can include any limitations that you want to when you are creating a limited power of attorney.
Durable Powers of Attorney
Our practice focuses on elder law and estate planning. Incapacity planning is an important part of this legal niche, because a significant percentage of senior citizens become unable to handle all of their own affairs at some point in time.
An incapacity plan is typically going to include durable powers of attorney. You could create a durable power of attorney for health care to name a medical decision-maker. With a durable financial power of attorney, you empower an agent to handle your financial affairs in the event of your incapacitation.
The “durable” designation is significant. Durable powers of attorney do remain in effect even if the grantor becomes incapacitated.
Free Incapacity Planning Consultation
You should certainly include an incapacity component within a broader estate plan. If you would like to discuss incapacity planning with a licensed professional, contact us through this page to schedule a free consultation: Grand Forks ND Incapacity Planning.