You may have heard a lot about powers of attorney, but you may be confused about whether you need one. Here are some frequently asked questions about these important documents.
What is a power of attorney? It authorizes someone else to act on your behalf in business, legal, or healthcare matters. There are several different types of powers of attorney:
- General: Authorizes an individual to act on your behalf in a variety of circumstances.
- Special: Authorizes an individual to act on your behalf in specific situations only.
- Health care: Authorizes an individual to make health care decisions on your behalf if you become incapacitated.
- Durable: General, special, and health care powers of attorney can all be made durable, which means that they remain in effect even in the event that you become mentally incapacitated.
What powers should my chosen representative have? The answer to this question depends on the type of power of attorney you have signed.
- General power of attorney: The range of allowed actions is very broad and includes transactions such as banking, buying and selling property, settling claims, entering into contracts, taking out loans, and filing tax returns.
- Special power of attorney: Authorizes your representative to do a specific task for you, such as handling banking transactions, buying or selling a car, and handling government issues.
- Health care power of attorney: Authorizes your representative to make health care decisions for you if you are unable to do so yourself.
Will a power of attorney be valid if I’m mentally incompetent when I sign it? The answer is no. You must be mentally competent at the time of the signing for the power of attorney to be valid. This means that you must understand the different powers you are granting to your representative and what it means to delegate this power.
When does the Power of attorney become valid? As soon as you sign it. This means that your representative can start making decisions and exercising the delegated powers immediately.
Consult with an estate lawyer today to have a power of attorney drafted to protect yourself before you actually need it. By then, it is too late.