What You Should Know Before Executing an Endorsement of Power of Attorney
A Power of Attorney can be a useful tool in estate planning. You will probably execute a Power Of Attorney at some point in your lifetime, or be named as the Agent under another’s Power of attorney. You may know the concept of a Power of Attorney but not all of its workings. With that in mind, an Indianapolis estate planning attorney at Frank & Kraft discusses what you need to know before executing a Power of Attorney.
What Is a Power of Attorney?
A power of attorney, or POA, is a legal document that allows the creator (referred to as the “Principal”) to grant another person (the “Agent”) the legal authority to act on his/her behalf. The type and extent of the legal authority granted to an Agent depends on the type of POA executed.
Are There Different Types of Powers of Attorney?
What many people fail to realize is that all POAs are not created equal. There are actually several different types Powers of Attorney. Understanding which type is best for your needs is essential to executing and ensuring that the document works as expected. Some common types of POAs include:
- General Power of Attorney: This grants the Agent broad authority to act on behalf of the Principal with few restrictions. Agents with general POAs can enter into contracts on your behalf, conduct financial transactions in your name and sell assets that you own. Before executing a POA, make sure you fully understand the authority that you are granting. Because the authority granted to an Agent under a POA is governed by state law, be sure that you understand the limitations that state law places on a general POA if you are appointed as an Agent to avoid unintentionally exceeding your authority.
- Limited (or Special) Power of Attorney: A limited POA “limits” the Agent’s authority to specific tasks or time frame. The Principal may grant the Agent authority to negotiate a car sale while the Principal is away. Durable Power of Attorney :
- A traditional POA terminates automatically upon the death or incapacity the Principal. The “incapacity’ limitation of a traditional POA led to the durable POA. Durable Powers of Attorney are those that survive the incapacity or death of the principal. If you do not want your POA to be durable, then you must state this in the document. Therefore, if you do not want your POA to be durable, you must say so within the document.Springing Power of Attorney:
- A “springing” Power of Attorney gives the Agent the power to act for the Principal only after a certain event occurs, such as when the Principal cannot be located for a designated period of time or becomes incapacitated.Medical Power of Attorney:
- Referred to by various names, such as a Healthcare Power of Attorney, Health Care Proxy, and Healthcare Surrogate, this type of POA allows the Agent to make medical decisions on behalf of the Principal if the Principal cannot make or communicate decisions.Can We Help You Choose the Right Type of Power of Attorney for Your Needs?
For more information, please download our FREE estate planning worksheet. For more information, please download our FREE estate planning worksheet. Mr. Kraft’s primary areas of expertise are estate planning, Medicaid planning, federal, state and corporate taxation, real property and corporate law. He also has a background in accounting.
Latest Posts by Paul A. Kraft Estate Planning Attorney (see all)
