Power of Attorney is a document that gives you the reign to appoint a person or organization of your choice to manage your property, financial affairs, and even medical affairs when you suddenly become unable to do so.
Power of attorney is mostly used when the principal (the owner of the asset) suddenly becomes ill or incapacitated or in special scenarios when the principal is not available to sign necessary documents for financial transactions.
A Power of attorney is not continuous. In that it can end for quite a number of reasons;
- On the event of the death of the principal
- If a court invalidates it
- The principal decides to revoke it
- The agent can no longer carry out his/her responsibilities for any reason
- If the principal decides to divorce his/her spouse who might have taken the responsibility of the agent
There are various types of powers of attorney and they fall either in the general power of attorney or the limited power of attorney. Each of them gives your attorney-in-fact, (the person in charge of making decisions on your behalf) some sort of control over your assets. The power of attorney is broad;
- The general power of attorney or limited power of attorney
- Special power of attorney
- Health care power of attorney
- A durable power of attorney
Types of power of attorney
- A general power of attorney: This type of POA gives broad powers to an organization or individual (an agent or an attorney-in-fact) to act on your behalf in any and all matters as allowed by the state. This kind of POA is very effective for individuals who would be traveling out of the country and might need someone to handle certain affairs. This POA can also be used when you are mentally or physically incapable of handling your affairs. The attorney-in-fact has the power to handle financial and business transactions, settle claims, make gifts, operating business interests, and even employ professional help. Generally, a general POA is often included in estate planning. This is to ensure that there is someone who can handle financial matters.
- Limited power of attorney: Just like the name suggests, the Limited power of attorney gives the agent to act on behalf of the principal only in specific matters. Limited power of attorney can also be limited to a specific period of time. Say a period where the principal is out of the country or out of town
- Special power of attorney: With this kind of POA, you can assign specific powers an agent can exercise. This is mostly used when you can no longer handle some important affairs as a result of health or other commitments. The special power of attorney has the power to handle some business transactions, collect debts, sell the property, and even manage real estate.
- Health care power of attorney: As the name suggests, the health care power of attorney is given to power to make medical decisions when you are unable to do so. This could be as a result of one being mentally incompetent or unconscious. This consists of legal instructions regarding your preferences for medical care in a situation where you are unable to make this decision yourself. This could be a result of you being indisposed, mentally incompetent, or in a coma. The person you choose to act as your agent may be called any of the following depending on the area you live
- Health care agent
- Health care surrogate
- Health care proxy
- Health care attorney-in-fact
- Health care representative
A health care power of attorney in Orange County, CA might be different from other states. Which is why it is imperative that you ensure that the individual;
- Is not a part of your medical team
- Is willing to discuss the end of life issues with you
- Is willing to discuss medical care with you
- Can be trusted to make decisions, putting your best interest at heart
- It can be trusted to be your advocate, just in case there is any form of disagreement concerning your health.
It is very important that when making this selection, you choose someone who holds your best interest at heart because your agent has the power to choose life or death
- A durable power of attorney: This POA is created mostly to keep your document valid. In other words, this is a general, special, or health care power of attorney that has a durable provision to keep the current Power of attorney in charge just in case you get mentally incapacitated or ill. You can decide to sign a durable power of attorney to prepare for the possibility that you may become mentally incompetent as a result of illness or injury. This can be made to your favor, by specifying in your power of attorney that it cannot go into effect until a doctor certifies you as mentally incompetent to handle your affairs.
How does the power of attorney work?
You need to understand that power of attorney requirements are different for each state. There are a lot of templates online and you might end up downloading the wrong one for you or your state. It is, therefore, very important that you locate an attorney with a specialty in your state. Trust Legal Center, Orange County, CA comes equipped with a lot of attorneys that can help you make a decision that is best for you.
There are certain provisos that everyone who needs to create a Power of attorney irrespective of state, should be aware of
- In all 50 states, there is no standard POA form. State laws and procedures vary across each state
- All states accept some version of the durable POA
The following rules apply across states even though the details might vary
- Some states accept the oral power of attorney, it is quite pertinent to note that this form of power of attorney can be unreliable. It is very important therefore, to ensure that each of the powers of attorney you grant to your agent should be spelled out word for word on paper. This written form provides clarity and helps to avoid arguments and confusion.
- It is very important to make use of the proper format. There are some POA’s that are made to last a lifetime and others are short-lived. Decide what powers you wish to grant and ensure that a specific POA is prepared to that desire whilst ensuring that the POA must satisfy the requirements of your state
- In creating a POA, you have to specify durability. In some states, a POA terminates the moment the principal is incapacitated. The best way to ensure that your agent is retained is if you specify that your POA is durable
- It is very important that the POA is notarized. This is applicable in most states.
In conclusion, choosing the right POA should be hinged on trust. It is, therefore, very important that you choose an agent very carefully. It should someone who can handle financial situations excellently well and has your best interest at heart. Your choice of POA determines how well your asset would be handled. Make this choice wisely.
Estate planning does not have to be rigorous. Hiring the right kind of attorneys that have your genuine best interest at heart can help you draft a detailed estate plan, help you make the best decisions according to your asset and make the distribution of your assets as seamless as possible. Trust Legal Center, Orange County, CA, has just the right attorneys to help you get started on your plan. Contact us today!