Powers of Attorney
A Power of Attorney is a legal instrument that is used to delegate legal authority to another. The person who signs (executes) a Power of Attorney is called the Principal. The purpose of the power of Attorney is to give legal authority to another person (called an Agent or Attorney-in-Fact). There are two types of powers of attorney – healthcare and property, which includes financial matters.
A Principal can give an Agent broad legal authority, or very limited authority. The Power of Attorney is frequently used to help in the event of a Principal’s illness or disability, or in legal transactions where the principal cannot be present to sign necessary legal documents.
The three types of Power of Attorney are:
- A “Nondurable” Power of Attorney takes effect immediately. It remains in effect until it is revoked by the Principal, or until the Principal becomes mentally incompetent or dies. A “Nondurable” Power of Attorney is often used for a specific transaction, like the closing on the sale of residence, or the handling of the Principal’s financial affairs while the Principal is traveling outside of the country.
- A “Durable” Power of Attorney enables the Agent to act for the Principal even after the Principal is not mentally competent or physically able to make decisions. The “Durable” Power of Attorney may be used immediately, and is effective until it is revoked by the Principal, or until the Principal’s death.
- A “Springing” Power of Attorney becomes effective at a future time. That is, it “springs up” upon the occurrence of a specific event chosen by the Power of Attorney. Often that event is the illness or disability of the Principal. The “Springing” Power of Attorney will frequently provide that the Principal’s physician will determine whether the Principal is competent to handle his or her financial affairs. A “Springing” Power of Attorney remains in effect until the Principal’s death, or until revoked by a court.