A “Power of Attorney” is an important legal document that grants to another person the legal right and ability to act on your behalf.
Powers of attorney can be broad or narrow, depending on your needs. A “general” power of attorney grants broad powers to another to do just about anything you can do for yourself, such as enter contracts, open bank accounts, or make other financial decisions. A power of attorney can also be “limited” to specific actions, such as signing a single document on your behalf.
A “durable” power of attorney remains valid even if you become incapacitated and can’t make decisions for yourself. A “Durable General Power of Attorney” is commonly used in estate planning for just such a circumstance; making it possible for your designated agent to make financial decisions on your behalf if you are incapacitated for any reason.
It’s important to remember, however, that the Durable General Power of Attorney allows your agent to act on your behalf even if you are not incapacitated, and you will bound by the actions of the agent. Some people feel uncomfortable with this and choose to execute a “Springing General Power of Attorney,” which “springs” into effect upon a persons incapacity. While the “springing” power of attorney grants no authority to act in your name until you become incapacitated, it has the negative feature of needing certain formalities to occur before your agent can act for you. For example, many springing powers of attorney require that a physician issue a letter documenting your incapacity before the agent can act for you.
All powers of attorney become void upon your death.
It is advisable to have some form of power of attorney in place in case of your incapacity. Otherwise important financial assets may become locked and actions delayed upon your incapacity.