A power of attorney (POA) is a document that empowers an agent or representative to act on behalf of an individual or “principal.” The POA has the authority to make decisions that would be in the best interests of the principal.
There are several things you should know about POAs — including why they can benefit you to have them in place.
Medical and financial power of attorney
A principal will typically name a POA to support the principal if they develop an illness or mental or physical disability that prevents them from caring for themselves. A medical or healthcare POA can make health-related decisions for the principal. This can include long-term health care, medication, surgeries or therapy. A POA may even make end-of-life decisions for the principal.
A POA can also be used to help with specific financial needs. A financial power of attorney could be used to pay bills, file taxes or run a business. Many principles use financial POA even if the principle is not incapacitated. This could be useful if the principal is away from their home due to work or military service and needs someone to care for the principal’s financial matters.
While multiple people can be named as POAs respectfully, one person can also be named as a general POA. A general POA has medical and financial decision-making capacity.
Limited and springing power of attorney
POAs do not have unlimited control. The principal can decide how much power a POA has and when they can exercise their powers. A limited POA is permitted to act for specific matters. Alternatively, a springing POA may only come into play if a certain, specified event happens.
If you are considering naming a power of attorney, you would be wise to seek legal guidance to discuss your estate planning options.