A power of attorney enables a person (the “principal”) to appoint another person (the “agent”) to handle a wide variety of powers and duties should the principal become incapacitated. There are several different types of powers of attorney, including:
- Health care
- Mental Health
The first type of power of attorney is a general power of attorney. In a general power of attorney the agent is designated to handle the principle’s affairs when they can no longer handle them themselves. This gives the agent a wide range of powers such as conducting banking or business, entering into a contract, making gifts, buying or selling real estate, filing tax returns and completing insurance transactions.
A durable power of attorney is effective for life unless revoked. All powers of attorney are considered durable unless it is specified otherwise. A durable power of attorney will be automatically revoked at a person’s death. A drawback to a durable power of attorney is that it comes with no guarantee that a third party, such as a bank, will honor the legal document.
A springing power of attorney becomes effective only after the principal’s incapacity is established by a health care professional. It is strongly recommended that the document have a clear definition of incapacity.
A financial power of attorney can be springing or durable. It is a document that gives the agent the power to make financial decisions on behalf of the principal. Before this document is effective, the agent must sign agreeing to act in the best interest of the principal and acknowledge the responsibilities they will take on.
A healthcare power of attorney designates someone to make healthcare decisions for the principal when they cannot due to incapacity, unconsciousness or some other reason. Many healthcare powers of attorney contain a provision known as HIPPA. This allows for the release of personal information to the agent so they can make more informed decisions.
Finally, a mental health power of attorney authorizes the agent to make mental health care decisions regarding care, treatment, service, or procedure to maintain, diagnose, treat, or provide for mental health, including any medication program and therapeutic treatment.
There are many different options when drafting your powers of attorney. Be sure to speak with a qualified estate planning attorney to determine the best power of attorney for you and your family.