If you are still new to estate planning, you may have heard about powers of attorney but have no idea what it means. Most people think that putting together a last will and testament is sufficient to ensure that their assets end up in the right hands. Frankly, the last will is merely the tip of the ice berg. Modern estate planning is much more detail oriented and perhaps all-inclusive, as it aims to provide all sorts of benefits to you and your loved ones, during your lifetime and after.
The power of attorney is a legal document that allows an individual to designate another person to act on their behalf in the time of need. Think about all the times you have had to make important decisions for your loved ones because they couldn't do it by themselves. If you are a parent or guardian, you probably understand how much your kids depend on you. Parents are a child's safety net, which keeps them out of harm's way.
However, when a person enters adulthood, parents can no longer control his/her life. Therefore, the question is that who will be in charge of executing your obligations if you happen to go missing or become incapacitated? Who will supervise financial and health related matters for you?
Estate Planning Attorney in San Francisco, CA, explains five different types of powers of attorney:
1. Durable Power of Attorney
The durable power of attorney allows an appointed agent to co-manage the affairs of your estate with you. This agent can continue acting on your behalf if you become incapacitated. You retain power over all financial and healthcare matters as long as you are sound of mind. Normally, the power of attorney is effective as soon as you sign the legal document, though you can make the transfer of power conditional. You can choose the person of your choice to make decisions for you only when you are incapacitated. Powers of attorney are revocable, i.e. they can be annulled or altered at any point in time. The power of attorney expires upon your death.
2. Non-durable Power of Attorney
An agent nominated for a non-durable power of attorney can only function while you are alive and well. Their powers will be terminated if you become incapacitated or die. For example, if you fall into coma, the person entrusted with durable power of attorney can make financial and medical decisions for you. On the contrary, an individual designated for non-durable powers of attorney can do nothing on your behalf when you become unconscious.
3. General Power of Attorney
The general power of attorney is also known as the financial power of attorney, as the elected agent gains control over several economic matters of the estate. Responsibilities and sanctions include payment of bills, entering/ending contracts, buying/selling property, managing transactions, making investments, collecting revenue, compensating creditors, and estate maintenance.
4. Medical Power of Attorney
The medical power of attorney or advanced medical directive lets you decide who should be in charge of your healthcare when you are clinically declared mentally disabled or compromised. The individual granted this power shall determine the kind of medical treatment or procedures you shall undergo while incapacitated. They also get the final word in medical matters including organ donation, release of medical reports, artificial life support, and surgery.
5. Limited Power of Attorney
The limited power of attorney permits the designated agent to act on your behalf for a particular objective and/or situation. You can create several of these, granting different duties/powers to each agent. This type of power of attorney can be terminated at a specific time or when the purpose had reached completion.