Everyone over the age of 18 needs a Power of Attorney. With this document, you name someone you trust to have the legal authority to make financial decisions on your behalf should you have a stroke, car accident or other circumstance that render you incompetent or incapacitated.
A general durable Power of Attorney allows the document to remain enforceable if the person becomes incapacitated or unable to care for themselves, physically or mentally. The specific language of this Power of Attorney is crucial.
Without a general durable Power of Attorney, the process to appoint someone to make your financial decisions can be complicated and costly. It may involve a court process to declare you incompetent and appoint a guardian, conservator or committee to handle your financial affairs. The court may require a psychiatric evaluation and other medical assessments.
Most people are familiar with a general Power of Attorney where a person acts on behalf of an individual known as the “principle.” A general Power of Attorney offers a wide range of power and is a very flexible document in terms of the ability to limit the power. This ranges from handling banking transactions, buying/selling properties, managing safe deposit boxes and government affairs.
A special “Limited” Power of Attorney is where an agent’s authority is limited to acting with regard to certain areas or assets. For example, you could say, “I only want my agent to handle a real estate transaction” or “I only want my agent to have access to my bank safe deposit box.”
The powers conveyed under a springing Power of Attorney can be as broad as a general/durable Power of Attorney and/or a special/limited Power of Attorney. A springing Power of Attorney can become effective when certain criteria are met, such as physical and/or mental incapacity. Before a springing Power of Attorney can become effective the mental and/or physical incapacity of the principal must be proven. This process can be lengthy and can involve mental and/or physical assessments conducted by multiple physicians. Another challenge is if/when the principal regains capacity. At such time, it must then be proven that the individual is competent and capable of handling his/her own affairs. Again, mental and/or physical assessments are needed to prove capacity has been regained.
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