As you go through life, there may be a time when you cannot make decisions for yourself, either temporarily or permanently. In this situation, a power of attorney can be extremely helpful. However, there are various types of power of attorney, and each carries a different level of authority. In this blog post, we will explore the various types of power of attorney roles and provide guidance on how to choose the right one for your needs.
What is a Power of Attorney (POA)?
A Power of Attorney (POA) is a legally binding document that appoints another party to act on your behalf (you would be known as the “Principal”). This appointed individual, known as an “Agent” or “Attorney-in-Fact”, is given authority to make decisions for you, which can include handling medical treatment, managing finances, or running a business in your name. The authority provided to an Agent can be broad or narrow and can be put in place for short-term or long-term purposes.
Types of Power of Attorney
There are several types of Power of Attorney (POA):
- General Power of Attorney: A General POA grants broad legal authority to manage all financial affairs on behalf of the Principal. This type of POA can be used for short-term or long-term purposes and is often used when the Principal is traveling outside the country or is otherwise unavailable to manage their financial affairs. With a General POA, the Agent can make decisions and take actions related to the Principal’s financial obligations, such as paying bills, managing bank accounts, and entering into contracts.
- Limited Power of Attorney: A Limited POA grants narrower legal authority to manage specific financial affairs on behalf of the Principal. This type of POA is typically used for short-term projects such as closing a real estate transaction or managing investment portfolios. With a Limited POA, the Agent can only act within the scope of the authority granted by the Principal and cannot exceed those limitations.
- Durable Power of Attorney: A Durable POA is similar to a General POA, but it remains in effect even if the Principal becomes incapacitated. This type of POA typically grants broad legal authority to the Agent to manage all financial matters on behalf of the Principal, even if the Principal is unable to make decisions or manage their affairs themselves. The Durable POA can take effect immediately or can become effective only if the Principal becomes incapacitated.
- Medical Power of Attorney: A Medical POA grants legal authority to make decisions regarding health care treatments and procedures on behalf of the Principal. This is particularly useful in situations where the Principal is unable to make medical decisions themselves, such as if they are unconscious or mentally incapacitated. The Agent can make decisions about medical treatments and procedures, as well as end-of-life care, based on the Principal’s wishes. Typically, this takes effect upon receiving consent from the Principal’s presiding physician.
- Special (or Springing) Power of Attorney: A Special POA only takes effect under certain conditions outlined in the POA. For example, a special POA may only be effective at a future time and only when a specific event occurs.
By taking the time to educate yourself on these different types of powers of attorney, you can be sure to choose the one (or more) that best suits your needs.
How to Choose the Right Attorney to draft your Power of Attorney
Choosing the right attorney to draft your power of attorney is just as important as the document’s provisions. A power of attorney involves significant trust and authority, so it is critical to find a drafting attorney that is knowledgeable, experienced, and trustworthy.
One of the first steps you can take when searching for an attorney is to ask for referrals from your trusted friends, family, or colleagues. Seek recommendations from people who have had positive experiences. To ensure that your power of attorney will be properly drafted, and enforceable, choose a drafting attorney in your state of residence. Our Attorney Network can assist your search.
Once you have narrowed down your list of potential attorneys, schedule consultations with one or more attorneys on your list. Meeting with potential legal representatives face-to-face will give you a chance to assess their communication style, legal knowledge, and overall rapport, as well as advocate for the type of POA arrangement that meets your specific needs and preferences. During your consultation, ask about the attorney’s experience in creating power of attorney documentation, their knowledge of current laws, as well as their fees. Communication is essential when creating a power of attorney, so choose an attorney who is responsive and able to answer your questions in a timely manner. Ask questions and seek clarification on any legal terminology or requirements that may be unfamiliar to you. A good attorney will make sure that you fully understand every aspect of your POA and keep you informed every step of the way.
By choosing an experienced attorney who can provide the advice you need, you can ensure that your key financial, health care, and other decisions are made in accordance with your wishes. With careful preparation and research, you can have peace of mind knowing that your personal affairs are in good hands.
Questions to Ask During Your Initial Consultation
Before your attorney consultation, it is important for you to consider:
- What kinds of authority will you grant to your Agent? Will the powers be broad to cover general financial matters? Or will they be narrow and specific to a project or task that you are unable to handle personally?
- Who should be appointed as your POA Agent? The person you choose will have significant authority over your finances, healthcare, and other important matters, so it is critical to select someone you trust and who is competent. Consider factors such as their availability, integrity, and ability to handle the responsibilities that come with being a POA Agent. Additionally, it is advisable to select an alternate Agent in case the first agent becomes unable to fulfill their duties.
- How long should the POA be in effect? Do you want it to last indefinitely or for a specific period? If you plan to travel or spend an extended period away, your POA can be set for a specific period. On the other hand, if you want your Agent to have durable power of attorney, it will last indefinitely.
During your attorney consultation, it is important to ask questions that will help you determine if they are the right fit for your needs. Consider asking the following questions about their experience and service:
- Can you estimate the percentage of clients you prepare power of attorney documents for?
- What factors do you take into account to ensure the power of attorney is appropriately drafted and executed in my best interest?
- How will the power of attorney affect my overall estate plan?
- How does your fee structure work and what is the estimated cost of representation?
- Do you require retainer fees or offer payment plans for legal services?
- What can I expect in the way of communications as you work on drafting the power of attorney documents?
- What other legal planning tools are at my disposal aside from a power of attorney?
- Are there any potential conflicts of interest with you representing me?
These questions can help ensure that you make an informed and confident decision when choosing the right attorney to handle your POA.
What to Do After Creating a Power of Attorney
Once the POA has been executed, it is critical to communicate with your designated Agent about their role and responsibilities. This includes discussing the scope of the POA, any limitations or restrictions, and any specific instructions or wishes to be followed. It is also important to keep a copy of the document in a safe and secure location. Your Agent should also be given a copy of the document or instructed on how to access it if needed.
Additionally, it is essential to keep the POA up-to-date and ensure that it accurately reflects your current wishes and preferences. If circumstances change, such as a change in your health, state of residence, or marital status, it may be necessary to make updates to your document. Communicate with your drafting attorney regularly to ensure that they follow through on their duties and protect your interests. Reviewing and updating your POA periodically will help you maintain control over your affairs and remain confident in the decisions being made on your behalf.
Power of Attorney with Members Trust Company
Members Trust Company (MTC) offers a range of financial services and has the expertise to act as Agent of a financial power of attorney. This role is especially beneficial for individuals who may not have children or those whose children live far away, as it can provide protection against elder abuse. As a leading wealth management provider, MTC manages assets, preserves family harmony, and makes crucial financial decisions for the clients they serve. MTC adheres to the fiduciary standard, a legal duty to act in the best interest of clients. This commitment to transparency, integrity, and prudence provides clients with peace of mind, knowing that their financial matters will be handled with care. For more information about power of attorney services, including our requirements for serving as Agent, please give us a call at (888) 727-9191.
Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks including possible loss of the principal amount invested. Members Trust Company, owned and managed by America’s credit unions, is a special purpose federal thrift regulated by the Office of the Comptroller of the Currency. Past performance is not indicative of future results. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Any opinions expressed are those of the presenter and do not necessarily reflect the position of Members Trust Company. The information above is obtained or compiled from sources we believe to be reliable. We Do Not Guarantee that such information, will be free from errors, omissions, whether human or mechanical, nor do we guarantee their timeliness, accuracy, or completeness.