Assigning one or more people powers of attorney authority is a crucial element of your estate planning. You need someone able to handle financial and legal affairs on your behalf and someone to speak on your behalf regarding health care choices in the event that you become incapacitated.
Yet, you might be understandably worried about giving someone such power over your life. That’s why it is important to understand the way these things work. These are some of the types of power of attorney you can designate, only under highly-specific circumstances generally involving capacity.
Durable power of attorney
Many people give a durable power of attorney to their spouse so that they can always act should the need arise. You can, of course, limit the scope of this authority.
A springing power of attorney
This power comes into play when certain conditions are met that make it impossible for you to act on behalf of your interests yourself. Until then, your designee will have no power over your affairs at all.
Limited power of attorney
You can use a limited power of attorney to give someone the power to carry out one or a few transactions on your behalf only. For example, you might give a close friend you used to sail with power of attorney to sell your yacht – as you know they are the best-placed person to do so. People also use it in everyday life to have someone cover them while they are away – for example, a business owner might give their associate the power to make a particular business deal because they will be on vacation when the paperwork needs signing.
Health care power of attorney
This kind of designee can communicate your health care wishes to doctors in the event you are unable to do so yourself. They won’t have any power over your finances unless you give them that separately.
If you are ready to allocate people power of attorney, make sure you get help to document your decisions and to better ensure that you understand all the implications of your choices.