Being A Power Of Attorney
Appointing a power of attorney (POA) carries a lot of responsibility. It’s important to understand what those powers cover since they vary based on the type of power of attorney. One thing they have in common is the fact that they expire upon the death of the grantor. At that time, the named executor in your will is the only authorized party to make legal and financial decisions or conduct financial transactions on the decedent’s behalf.
Below is an overview of different power of attorney arrangements—be sure your loved one knows what agreements you’re putting in place and how they fit into them.
General Power of Attorney is often included in an estate plan to make sure someone is appointed to handle financial matters. It gives broad powers—including handling financial and business transactions, buying life insurance, settling claims, operating business interests, making gifts, and employing professional help—to a person or organization (agent or attorney-in-fact) to act on someone else’s behalf. It’s an effective tool if the grantor will be out of the country and needs someone to handle certain matters, or when they are physically or mentally incapable of managing their own affairs.
Special Power of Attorney specifies exactly what powers an agent may exercise. This is often used when the grantor can’t handle certain affairs due to other commitments or health reasons. Some common matters specified using a special power of attorney include selling property (personal and real estate), managing real estate, collecting debts and handling business transactions.
Healthcare Power of Attorney grants the agent authority to make medical decisions if the grantor is unconscious, mentally incapacitated, or otherwise unable to make decisions on their own. While different from a living will, many states allow the grantor to include preferences concerning life support. Some states will allow you to combine parts of this and a living will into an advanced healthcare directive.
Durable Power of Attorney is simply a general, special, or healthcare power of attorney with a durability provision to keep the current power of attorney in effect. Many people execute this to prepare for the possibility that they may become mentally incapacitated due to illness or injury. It may specify that it can’t go into effect until a doctor’s certification.
It is critical to make sure all your estate planning documents are up to date and that you’ve shared copies (along with the locations of the original documents) with your loved ones. Understanding what to do with power of attorney responsibilities is important for your family’s future, be sure to review the options and choose one that’s best for your situation.
C-J Advisory, Inc. is a registered investment adviser located in San Jose, CA. Registration of an investment adviser does not imply any level of skill or training and is not an endorsement of any regulatory agency.
This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.