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What is a Power of Attorney?

What is a Power of Attorney?

Many people are familiar with the term “power of attorney,” but understanding what that means can be a little more complicated. “Power of attorney” is often encountered in dealing with a loved one’s medical treatment when that person may not be able to make decisions for him or herself, but it goes beyond that.

A power of attorney is a legal document that appoints someone to handle your medical, legal, and other decisions on your behalf. There is more than one type of power of attorney, and it is important to understand the type of power of attorney that is at issue because that will affect the scope of the authority that the appointed person or agent, sometimes referred to as “attorney-in-fact,” has. It will also affect the point at which the authority granted to the agent ends.

A general power of attorney grants the agent fairly broad decision-making power. This could include managing finances for someone who is incapable of doing so for themselves, making decisions about sales and purchases of property for someone else, or any number of other decisions that would be involved in generally managing a person’s affairs. Documents creating a general power of attorney may say something to the effect of “I grant this person the authority to do anything on my behalf that I could legally do through an attorney-in-fact.”

A special power of attorney is similar to a general power of attorney, but limits the agent’s ability to make decisions to a particular area of their affairs or a specific situation. This type of power of attorney could specify that the agent is only responsible for deciding what life insurance policy will be purchased, or could specify that the agent can make any decisions involving one’s finances but cannot make any decisions about one’s medical treatment. The document appointing the power of attorney will specify the scope of the authority.

The most commonly recognized power of attorney is probably the medical, or health care, power of attorney. Many people will encounter this phrase and documents that can appoint one as a medical power of attorney when a close friend or family member is hospitalization or in an otherwise serious medical situation. Medical power of attorney allows the agent to make healthcare decisions for a person who is unconscious, mentally incompetent, or otherwise unable to make medical decisions on their own. 

Even more important that these categories of powers of attorneys, however, is understanding how the power of attorney relationship is created and when the relationship ceases to exist. For all powers of attorney, the person appointing the power of attorney must be competent at the time that the document is signed and the relationship is created. Where the power of attorney is an ordinary power of attorney, the agent’s authority to make whatever types of decisions they have been appointed to make will cease to exist at the time that the person becomes incompetent. Where the power of attorney is a durable power of attorney, the authority will continue to exist even where the individual becomes incompetent or incapacitated. For this reason, most medical powers of attorney are durable, rather than ordinary. The power of attorney document can also specify the point at which the authority ends, such as once a particular transaction is complete or a date certain. In any event, all powers of attorney end at the time that the appointing person dies, and the decision-making authority does not survive the person’s death.

Powers of attorney can be helpful, or even necessary, in many situations, but it is important to understand what signing a power of attorney entails and the effect that it will have. It is best to contact an attorney to help guide you through the process and to answer any questions that you may have as you make important decisions about granting your authority to have someone act on your behalf.

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