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FAQ: Probate & Estate Administration

What is a Power of Attorney?

A power of attorney allows you (the principal) to name a specific person (the agent or attorney-in-fact) to legally act on your behalf. A power of attorney can be general or specific.

  • A general power of attorney means there are no limits to the authority of the agent to enter into legal agreements on behalf of the principal or to modify existing legal agreements between the principal and others.

  • A specific, or special, power of attorney means the principal has placed limits on the scope of authority of the agent so that the agent can only act in specific circumstances.

Generally, the principal can revoke the power of attorney at any time, and the authority of the agent to act on behalf of the principle ends either at the principal's death or at the principal's incapacitation.

In order to allow people to choose someone to act on their behalf should they become incapacitated, the durable power of attorney developed. Unlike ordinary powers of attorney, the durable power of attorney does not terminate when the principal becomes incapacitated. These types of powers of attorney have become effective estate planning tools, allowing the principal to choose agents to make health care decisions and financial decisions on his or her behalf should the principal be unable to do so.

A power of attorney can be surviving or springing. A surviving power of attorney simply means that the agent's appointment comes into force once the power of attorney document is executed by the principal. Unless stipulated otherwise, powers of attorney generally are surviving.

A springing power of attorney, on the other hand, does not come into force until some future occurrence takes place. This can be a future date or an event, such as the principal's incapacity or disability. The required future occurrence is set out in the power of attorney document. Since many people prefer a power of attorney not come into force unless needed, springing powers of attorney are common.

Two common types of powers of attorney used in incapacity planning are the financial power of attorney and the health care power of attorney. The financial power of attorney allows you to designate an agent to make financial and business decisions on your behalf. This may include selling and buying real estate and stocks, making investments and managing your business interests. A health care power of attorney is someone whom you designate to make treatment decisions on your behalf, which can include whether artificial life support is given. As with all powers of attorney, you can determine how much authority you would like your financial and health care agents to have.

When choosing a person to act as your agent, you should select someone you can trust and who is able to fulfill the obligations and duties of the designation. A power of attorney is a powerful instrument, giving the agent the authority to enter into legally binding contracts and agreements, make financial and business decisions and more.

Specific types of powers of attorney may have different names, depending on your jurisdiction. For more information on executing one of these documents, contact an experienced attorney in your area.

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