A Power of Attorney is a document that grants an “agent” or “attorney-in-fact” the authority to make decisions on behalf of the principal who created the document. In case you can’t make decisions for yourself, this document allows someone else to act with the same authority as you. The laws for creating this document vary from state to state, but there are specific guidelines to follow.
The principal decides the level of power given to the agent, and he/she can be given the legal authority to handle only one particular issue or deal with most of the principal’s estate and financial matters. The attorney-in-fact could be a spouse, son/daughter, trusted family member or close friend. And regardless of how well you might know the individual, it is important you talk with them and let the individual know your plan.
Certain situations may trigger the need for power of attorney for any individual over the age of 18. There are different needs for POA planning. However, to avoid complication, it is in your best interest to cover all possible situations. For instance, if you have been sick for a while or you travel a great deal, it might be time for you to set up the power of attorney so that someone could handle your affairs, especially if you don’t have a spouse to do it in your absence.
Do not confuse Living Will with the Power of Attorney. A living will is a legal document which allows you to name someone close to you to make medical decisions on your behalf. A living will specifically delineate your wishes. Another significant difference is that living will is limited to only deathbed concerns. Power of attorney for health care, on the other hand takes of all the health care decisions.
A Durable Power of Attorney means that a power of attorney granted to your attorney-in-fact will continue to be effective even in the case whereby you become mentally incompetent or incapacitated due to other factors. Whereas, a power of attorney becomes invalid if any of this kind of incident occurs.
Power of attorney ends when the principal changes or passes the attorney-in-fact to another individual.