Power of Attorney 101
Powers of Attorney (POA)-Frequently Asked Questions
Who can get a POA? Capacity in a nutshell.To consider entering into a POA, a person must be over age 18, not under the influence of drugs or alcohol and who is not suffering under any mental disease or defect. This means that a POA must be done before common issues like dementia arise. Once a diagnosis of Dementia has been given, a POA can no longer be issued and you must then pursue the much longer process of guardianship litigation.
When is it valid? Execution dos and don'ts.A POA must be in writing, must be signed, witnessed (by disinterested individuals) and notarized. Both the person giving away the power (the "Principal") and the person accepting the power (the "Agent") must sign and notarize affidavits about taking on this responsibility. A POA is valid once signed by the Principal but doesn't become active until signed by the Agent. From a planning perspective, a Principal can set up and execute a POA before it becomes a necessity and keep it in a safe place until it is needed. When it becomes necessary, the Agent can retrieve, activate and utilize it. With that process, the Principal can maintain present autonomy and security while being prepared for the curveballs life can throw.
What does it cover? Scope of a POA is broad.A POA essentially creates a clone of the Principal and can be as broad or as narrowly tailored as possible. Consider a POA you may sign for a title company with respect to a home or car loan vs. a POA that allows the Agent to open and close bank accounts and write/cash checks on the Principal's behalf, with or without notice to the Principal. A POA should always be carefully tailored to suit the situational needs of the Principal, to ensure it's practical application accomplishes your goals, and protects your interests.
Are they all the same? Types of POAs matter.Durable, Financial, Springing, Healthcare-- are all different types of POAs. The type that you need depends on your situation. Durable POAs are just that; they usually convey broad classes of authority and are appropriate for most situations. A Financial or Healthcare POA Will speak to just those areas respectively, with specifically identified powers for the Agent. A springing POA is one that's only effective if something-specific occurs. This type is used during deployments and often w/the occurence of a condition; such temporary (or continuing) lack of capacity or other medical condition.