What happens if you become incapacitated? Who can act on your behalf to take care of you and pay your expenses? If you have not made provisions for these events, then a legal guardian, appointed and supervised by the Court, will make these decisions for you. This process causes delay and can be quite costly. These matters can be avoided with a carefully drawn Power of Attorney.A Power of Attorney permits an individual (your “agent” or “attorney-in-fact”) to act your behalf. In general, there are two board types of financial powers of attorney: (i) General Power of Attorney and (ii) Limited Power of Attorney.
A General Power of Attorney, like its name implies, gives your agent the immediate authority to handle your financial affairs with little or no restrictions. These matters could include paying your bills, accessing your bank accounts and managing your investments. Unless specifically drafted otherwise, the authority under a General Power of Attorney ends upon incapacity or death.
For this reason, General Powers of Attorney are often drawn to be “durable,” meaning that your agent can continue to act for you after incapacity, although the authority to act ends at death. In some instances, you may recognize the importance of a General Power of Attorney, but may be uncomfortable granting immediate authority to act on your behalf. Rather, you may be inclined to have assistance only upon the happening of a certain event, such as incapacity. As a result, a General Power of Attorney can be drawn as “springing” so that your agent can spring into action only if you become incapacitated.
A Limited Power of Attorney gives your agent a limited or special authority to perform certain acts for you. Common uses of a Limited Power of Attorney include handling a real estate transaction and addressing tax matters (which are often permitted only with use of an IRS approved form). By their very nature, Limited Powers of Attorney generally end when the action required of your agent is complete.
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