We answer this common estate planning question.
A power of attorney is a legal estate planning document with a variety of uses. With a power of attorney (sometimes abbreviated POA), you can give another person legal authority to act on your behalf. In essence, the person you choose steps into your shoes.
The person who creates the power of attorney is referred to as the principal. The individual who is given authority to act is called the agent. Because it’s important to clearly define the agent’s authority, it’s critical to work with an experienced estate planning lawyer to create an effective power of attorney.
Chances are, you will probably encounter several situations throughout your life that require a power of attorney. One of the most common questions people ask is when exactly the power of attorney becomes effective. The answer depends on the type of power of attorney you create. In general, a power of attorney becomes effective immediately unless the document itself states otherwise.
There are several different kinds of powers of attorney. Your estate planning lawyer can help you pick the right one for your needs.
General vs. Limited Powers
First, a power of attorney can give the agent general or limited powers. As the name suggests, a general power of attorney gives your agent broad authority to act for you. With a general power of attorney, your agent can oversee numerous financial matters, such as making your bank deposits, paying your bills, withdrawing money from your accounts, and even signing a contract on your behalf.
By contrast, a limited power of attorney gives your agent only the powers listed in the power of attorney document. During the estate planning process, you can tailor your limited power of attorney to your specific needs and wishes.
Durable vs. Nondurable Power of Attorney
A power of attorney can also be durable or nondurable. With a nondurable power of attorney, the agent’s authority expires upon the principal’s death, incapacity, or upon a specified date. If you want your power of attorney to last beyond your incapacity, you must create a durable power of attorney. With a durable power of attorney, your agent can act on your behalf even if you become physically ill or mentally incapacitated.
Immediate vs. Springing Power of Attorney
Regardless of whether a power of attorney is durable, nondurable, general, or limited, it becomes effective as soon as it is signed by the principal – unless the power of attorney specifically states that it becomes effective upon a specific event. In other words, it “springs” into action when the event occurs. In most cases, springing powers of attorney are created to become effective when the principal becomes incapacitated. For example, a parent might create a springing durable power of attorney that gives an adult child authority to act upon the parent’s incapacity.
Springfield, Missouri Estate Planning Law Firm
Powers of attorney are powerful documents that can be lifesavers in an estate plan. At the Law Offices of Randy L. Smith, LLC, we help people create estate planning documents that provide peace of mind. Call today at (417) 841-2775 to speak to an experienced estate planning lawyer about a power of attorney.
This website has been prepared by The Law Office of Randy L. Smith, LLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.