A power of attorney allows you, the principal, to designate a person or an institution (referred to as your “agent” or “attorney-in-fact”) to manage your private affairs, business, or other legal matters if you are no longer able to do so. This designation can be effective as soon as the estate planning documents are signed or in the future, when a specific event, such as incapacity of the principal, occurs. Doing this prior to such an event avoids the necessity of going to court and seeking the appointment of a conservator of the person and estate in the event of incapacity.
Types of Power of Attorney
There are three different types, which grants your attorney-in-fact different powers:
- General – A general power of attorney gives your attorney-in-fact broad powers to make business and financial decisions on your behalf such as paying your ongoing expenses, real estate management, filing taxes, and managing your investments. This type can be used if you are going out of the country for an extended period of time and need someone to manage your daily financial affairs or if you are incapacitated and can no longer handle your financial affairs.
- Special – A special power of attorney gives your attorney-in-fact authority to act only under specified circumstances. For example, you could grant your attorney-in-fact authority to sell your home, run your business, or handle certain transactions on your behalf. For this type, it is important to be specific as to what powers you want to grant to your attorney-in-fact.
- Durable – A durable power of attorney is simply a general or special power of attorney. However, “durable” means that the document retains legal effect in the event you become incapacitated.
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The dedicated estate planning attorneys at Mackay and Martin LLP are dedicated to helping your family in the unlikely event of your incapacitation and/or unable to take care of your daily affairs.