A power of attorney, or POA, is a legal document that has been around in varying forms for centuries. The concept, or purpose, behind a power of attorney is the ability to give another person the legal authority to act on your behalf. The extent and the duration of the authority depends on the type of POA that you execute. Although POAs are widely used by people of all ages, they are particularly popular with the elderly. Unfortunately, they are also widely used by people who want to take advantage of the elderly. If someone has suggested that you execute a power of attorney, be sure that you understand what you are signing first. Consulting with an experienced and qualified estate planning attorney is the best bet; however, there are some basics that can help you in the meantime.
- State laws govern the formation and interpretation of a POA. Although there are similarities, make sure that you understand the laws in your specific state before signing anything.
- Do not confuse a POA with a healthcare power of attorney, living will or advance health care directive. The name may vary from one state to another, but these documents are intended to give someone the power to make healthcare related decisions in the event of your incapacity only. They are very specialized documents that typically follow a state approved form which includes specific language. They are also frequently registered with the state.
- Traditional POAs come in two general forms — durable and non-durable. A non-durable POA will terminate upon your incapacity. A durable POA survives your incapacity.
- All POAs terminate upon your death.
- You may rescind a POA at any time.
- You may make a POA as specific as you wish. For example, you could execute a POA that only gives someone the authority to complete the sale of your car.
- You can also make a POA very broad. You can give someone the authority to transact any legal business on your behalf, for instance. Be very careful when you grant a broad POA as you are essentially giving the person access to most of your estate assets and financial affairs.
Powers of attorney are very useful and powerful documents that can be used to the advantage of the person creating the POA. Unfortunately, it can also be misused if it gets into the hands of the wrong persons. When considering the creation of a POA, one should avoid the boilerplate forms which can be found on the internet and some self-help books. Like other estate planning documents, they should be carefully drafted and executed. The best way to assure you get a power of attorney drafted to meet your needs and goals is to work closely with an experienced and qualified estate planning attorney.