A power of attorney is a legal document that allows you to appoint a person or organization to manage your property, financial, or medical affairs if you become unable to make decisions for yourself. However, there are several types of power of attorney that work to achieve separate goals. Below, our Lancaster estate planning team outlines each type of power of attorney and how they can benefit you.
Types of Power of Attorney
Powers of attorney come into place when you become suddenly incapacitated and unable to make decisions on your own. Powers of attorney can help make important medical decisions, pay taxes, and other financial decisions. There are four types of powers of attorney:
General Power of Attorney. A general power of attorney gives broad powers to a person or organization to act on your behalf. These powers include handling financial and business transactions, buying life insurance, settling claims, operating business interests, making gifts, and employing professional help.
This power of attorney is an effective tool if you anticipate being out of the country and need someone to handle certain affairs, or when you are physically or mentally incapable of handling them yourself. A general power of attorney is often included in an estate plan to make sure someone can handle financial matters should you be unable to do so.
Durable Power of Attorney. This holds the same abilities ad general power of attorney, but remains valid even when the principal is incapacitated. This tool can also be used to prepare for the possibility that you may become incompetent due to an illness or injury. This power of attorney, however, may not go into effect until a doctor certifies that you are mentally incompetent.
Limited Power of Attorney. If you are not entirely confident with giving a single person or organization the authority to handle a broad range of tasks, you may give them a limited power of attorney.
An example of this is instead of granting your agent authority to handle all real estate transactions on your behalf, you can authorize them access to only one specific property.
Springing Durable Power of Attorney. This power of attorney only goes into effect when specified conditions are met. An example where a springing power of attorney may be extremely useful is when members of the military are deployed overseas. A springing power of attorney allows someone appointed in the document to manage the individual's financial affairs if they become incapacitated while they are abroad.
Contact Our Lancaster Estate Planning Team Today
Planning for the future is important. Life can happen fast, and making sure the interests of you and your loved ones are upheld no matter what is important to us.
If you would like to learn more about how power of attorney can benefit you, do not hesitate to contact us today through our website or give us a call at (661) 426-2499 to schedule a consultation!