When it comes to legal matters, one question that people really want to know the answer to is what are the four types of power of attorney. However, before actually answering the question, we need to first establish what a power of attorney means.
As per the power of attorney definition, it is a legal record with which you can assign someone else to take charge of your matters in case such a situation arises where you are unable to do it adequately. The individual who is selected, is known as the agent (or attorney-in-fact) while the one who selects is known as the principal.
In the same manner, big corporations may also implement the idea of having a power of attorneys as part of their business strategy, such as in the case of auto insurers, wealth managers, or construction companies.
You need to keep in mind that when it comes to power of attorney, there are different kinds. This is why you need to be absolutely sure on which one you want to choose based upon what your circumstances require. However, regardless of what type of power of attorney your case falls under, you still need to know about the four most common types if you want to ensure that you made the right choice for yourself.
The Four Types Of Power Of Attorney
Limited Power of Attorney
A limited power of attorney is used when you need someone to act as your representative but for a short or limited period of time, or even for a small but still important purpose. Moreover, before signing, you need to make sure that the document clearly mentions the date and the time when the agent will no longer be in power. For example, a writer can appoint their book agent to have limited power of attorney so they can redeem the outstanding cheques for the writer. In this manner, the agent can also take their commission from those payable checks and then make a new copy of a cheque with the remaining amount for the writer. On the other hand, if you want to leave the city for some time for an important business, but the lease to your new house needs to be signed on the same day, then you can appoint someone you trust as the limited power of attorney who can do this task for you.
General Power of Attorney
A general power of attorney is comprehensive and includes everything. Signing this document will give all the authority and the rights you have to a trusted individual of your choice, who will then manage them. In most of the situations where a general power of attorney is used, the principal is disabled. However, this particular type of power of attorney can also be used for anyone who does not have the time, expertise, knowledge or desire to deal with all their finances. The power you give to the agent by signing this document will remain with that individual until the day of your death or at least until you are incapacitated. However, if you annul the contract before that tie, you can take the power away from the agent. General power of attorneys are typically assigned to overlook things such as applying for health or social security benefits, redeeming cheques, acquiring debts from anyone who owes anything to you, handling your finances, managing your business, buying or selling items on your behalf, filing petition in court for you or making financial investments as your representative.
Durable Power of Attorney
The main factor that can help differentiate a durable power of attorney with the rest is that this document and the terms and conditions on will continue to exists even after the principal becomes incapacitated. Therefore, if you want to appoint an agent with durable power of attorney, make sure you do that only if you cannot perform for yourself or if you want the agent to continue to have the authority even after you cannot perform for yourself. For instance, if the doctors have just diagnosed you with an early stage of Alzheimer’s disease, you can assign someone you trust as a durable power of attorney. The agent can then start with their responsibilities as your representative, and then continue with them when you are eventually unable to do it on your own. On the contrary, if you become incapacitated while having a limited or general power of attorney, the document will automatically be terminated. In such a case, the court will designate a guardian or conservator who will see to your matters and manage all your accounts and dealings. However, you do have the right to abolish a durable power of attorney at any time before becoming disabled.
Springing Power of Attorney
A springing power of attorney is also known as a conditional power of attorney. This document serves the same function that a durable power of attorney does. However, it only comes into play when the principal has undergone a medical emergency, usually an incapacitation. For this document, make sure you make your definition of ‘incapacitation’ absolutely clear to the other party involved. As an example, someone from the military may assign an agent with a springing power of attorney that comes into action once the principal has been deployed overseas. However, this document can be terminated at any time, when you become incapacitated, or upon your death (or that of the agent).
Things An Agent (Attorney-in-Fact) Can And Cannot Do
As a principal, it is highly important for you to mention in the document the kind of authority and duties that you are handing over to the agent. It doesn’t matter what kind of power of attorney you choose for yourself, the agent in any case will only have the authority to do what the document states.This is why you need to be extra careful and ensure that you have explicitly mentioned all the powers and responsibilities that the agent has been assigned with. Given below are some things that an agent cannot do at any cost, despite whatever power the principal has appointed him/her with:
- An agent cannot testify that the principal has knowledge of facts, such as from witnessing an accident.
- In a public election, an agent cannot vote on behalf of the principal .
- An agent cannot form, alter or nullify the principals will.
- An agent cannot carry out any contract based services on behalf of the principal, such as writing a book
- An agent cannot take over any guardianship or conservator responsibility that the principal might have had before signing the power of attorney document.
Power Of Attorney Format
There aren’t any fixed wordings that you have to follow when it comes to writing the document because everyone will have their own terms and conditions (make sure to have a lawyer with you). However, there is a certain format that needs to be kept in mind in order to make sure that the power of attorney document looks organized and maintains coherence. The guideline overview is given below.
1) The first step is to include a small statement where you let anyone reading the document know that you are handing over certain powers to the agent you have appointed. This section can look like this:
“Know by all means those who are present that I, <Principal Name>, holder of <Principal ID Document> number <Principal ID Number> and residing at <Principal Address> do hereby make and assign <Attorney Name>, holder of <Attorney ID Document> number <Attorney ID Number> and residing at <Attorney Address>, as my legal attorney in my place and in my role, giving him/her the power to do all of the following and do hereby authorize and advocate all those things which my true and legal attorney may do or have be done:”
2) The next part would mention all the things that the agent has the authority to do. This list is very important because it highlights all the things the attorney has power over, so make sure that everything is mentioned clearly.
3) The next to add in the power of attorney document is the date from which it will become effective. Make sure that you mention that this power is temporary and that it will no longer remain active once the document has been terminated.
4) The last part involves the signatures of the Principal and two other witnesses. The addresses of both the witnesses also need to be mentioned. A general statement on behalf of the witnesses also needs to be mentioned. It can go like this:
“We, the appointed witnesses, do hereby declare under penalty of falsehood that we have witnessed the Principal whose name, identity and handwriting we can identify, signing and authorizing this Power of Attorney in our presence. We admit that we are not tied to the Principal by blood, marriage or adoption. We do not give any medical treatment to the Principal and neither are we recipients under his/her Last Will and Testament. We confirm that the Principal seems (in our best judgement) to be doing this voluntarily and seems to be free from external pressure or force. Moreover, the Principal seems to be in sound senses and does not seem to be doing this because of any undue influence”.
How Do I Get A Power Of Attorney
Given below are some basic things that you need to keep in mind and follow if you want to get a power of attorney in the United States:
- Make sure you talk to your loved ones and decide whether or not having a power of attorney is the right option for you
- Choose someone who you will appoint as the agent
- Decide what kind of power of attorney is the best fit for you
- Contact a state attorney
- Check your state’s requirements
- Download a template for a power of attorney form or write it yourself
- Make sure to proofread your document so that everything is mentioned clearly
- Hire an attorney to go over the document as well
- Ensure that you have at least two witnesses
- Have the power of attorney document notarized.
- Keep it somewhere safe
In the United States, a Power of Attorney can give the appointed agent the authority by law to make medical, financial, and sometimes even personal decisions (including suggesting a guardian) for the principal. Usually, a power of attorney is given to someone when you are not capable of managing either all or a part of your affairs for a certain amount of time. Keep in mind that the process of acquiring a power of attorney may differ from one state to another. However, in most cases it is quite general and involves filling out a form and having it notarized. Moreover, power of attorney laws in other countries might also be different than they are in the U.S. so it is important to always consult your country’s jurisdiction before making any decision.