Understanding the Different Language Used in a Power of Attorney
Understanding the Different Language Used in a Power of Attorney

Understanding the Different Language Used in a Power of Attorney

You have many options when creating a Power of Attorney, commonly referred to as a POA.  There are different types of POAs, and each one serves a unique purpose. Having multiple POAs, each one for a different purpose, is very common.

The following two questions should be your key considerations when preparing a POA:

  1. What powers am I giving to my agent?
  2. When can my agent exercise those powers?

What Powers am I Giving to my Agent?

When you create a power of attorney, you are appointing an agent to make certain decisions on your behalf and defining the decisions that the agent may make.  The two primary types of powers that can be granted to an agent are:

  • General:  A general power of attorney grants your agent the power essentially to step into your shoes and make any decision on your behalf that you would otherwise be able to make on your own.  A general POA is ideal in situations where you may require someone else to take care of all of your personal affairs on your behalf. For example, general POAs are commonly used to plan for an individual’s potential incapacity, but they can also be used if you are expecting to be travelling for an extended period of time.
  • Limited:  A limited power of attorney grants your agent the power to make specific, defined decisions on your behalf.  Sometimes limited POAs are also referred to as “Special POAs.” A limited POA can be limited to a single decision (like a power of attorney granted to a realtor giving him or her the authority to sell your home), or it may include several, specific powers.  With a limited POA, you can also place limitations on when and how your agent can exercise the powers granted in the POA.

When Can my Agent Exercise the Powers Granted in a Power Of Attorney?

In addition to deciding what powers to include in your POA, you must also consider when your agent may exercise those powers.  The two primary considerations when it comes to timing are:

  • Durable vs. Non-Durable:  Absent special, statutory language, a power of attorney (whether general or limited) is non-durable.  A non-durable POA means that your agent will no longer be able to exercise the powers granted under the POA if you become incapacitated or disabled.  Obviously, if you are trying to plan for your potential future incapacity, this result is unacceptable. Adding language that specifically states that the powers granted in a POA are not revoked in the event of the principal’s incapacity or disability often creates a durable POA and avoids the problems associated with non-durable POAs.
  • Springing vs. Immediate:  A springing POA will not become effective until certain conditions are met.  For example, springing POAs often provide that the agent may not exercise any of the powers granted in the POA until the principal becomes incapacitated.  Once, and only if, the principal is determined to be incapacitated, the agent may then act according to the POA. In the absence of such conditions, a POA is effective immediately, and the agent can begin exercising the powers granted by the POA as soon as it is executed by the principal.

If you need to have a power of attorney created for any reason, or if you are not sure whether or not you need a power of attorney, then you should consider talking with an attorney like The KC Estate Planner, LLC, who fully understands these documents and their subtle nuances.