Power of attorney can be a confusing term for those who are not familiar with legal language, especially since the word attorney is synonymous with a lawyer. However, in the context of power of attorney, the word attorney simply means a person who acts as an authorized agent on behalf of a principal. The principal is the individual who appoints the agent, granting the agent the power to act on their behalf.
The overall purpose of a durable power of attorney is to allow another person to take care of essential matters when and if the principal becomes incapacitated.
What Does Power of Attorney Cover?
Typically a power of attorney authorizes the agent to handle financial matters of various types. The powers granted under a financial power of attorney are stipulated by state law and a standard power of attorney form references the applicable section of state law. Additional powers may be added to the document if needed.
For example, a durable power of attorney may grant an agent authority to conduct banking transactions. This provides a legal means for adult children to handle day to day financial affairs for an aging parent. If the adult child additionally has a durable power of attorney over real estate, as agent for the parent he or she can legally handle the sale of the house, for example, if the parent is incapacitated and permanently enters a residential healthcare facility.
When individuals draw up a durable power of attorney they can select the financial areas that an agent can handle. The agent’s authority can be broad or more limited in the durable power of attorney depending on your desires and specific needs.
Other Types of Power of Attorney
The major feature of a durable power of attorney is that it remains in force after the principal becomes incapacitated. Other forms of power of attorney no longer apply once the principal is incapacitated. For example, a mother has retired to Florida and given her daughter a non-durable power of attorney to handle the sale of her home. Shortly after moving to Florida the mother’s health fails and she can no longer make her own decisions. In this case the daughter is no longer legally authorized to handle the real estate transaction; a durable power of attorney is needed.
Setting up the proper durable power of attorney is an essential part of financial and incapacity planning for all adults and especially for seniors.
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