A power of attorney, or a POA, is what allows a person, called a principal, to authorize another person, called the attorney-in-fact or agent, to legally act in their place. There are a few different types of power of attorney to keep in mind:
General: This authorizes the person you name to handle your affairs, like paying your bills, doing your taxes or conducting financial transactions on your behalf. For example, if you are going to be out of the country and you need someone to handle your financial affairs while you are gone, you may want to sign a general power of attorney. This is the most all-encompassing type of power of attorney. This, and the other types of power of attorney, can be revoked at any time as long as you, the principal, are mentally capable.
Limited: With this type of power of attorney you are able to place restrictions on your agent’s general powers. This is a power of attorney that is valid only for a specific event and usually becomes inactive after that event’s completion or at a time stated in the document. For example, if you are going to be out of town, but need to be present to sign legal papers, you could have your power of attorney step in for you to sign the papers and after he or she signed the papers, the power of attorney would no longer be valid.
Durable: In Arizona, durable power of attorney is defined as a power of attorney that remains in effect after the person who singed it is unable to make decisions for him or herself.
Specific (or Springing): This is similar to a durable power of attorney, except it doesn’t take effect until after you become incapacitated.
Durable power of attorney is the most common type of power of attorney used in estate planning. It is what allows you to appoint a person you trust to act on your behalf if you become ill, seriously injured, or otherwise unable to communicate your wishes.
A durable health care power of attorney allows the person you name as your power of attorney to speak with your doctors and make medical decisions for you if you become mentally or physically unable to do so yourself. A living will is often used in conjunction with a durable health care power of attorney. This document outlines your wishes for end of life care. In Arizona, you might hear these two documents referred to as “advance care directives.”
When choosing a durable health care power of attorney, it is important to choose someone who you are sure will not want to go against your wishes. If you do not have a an advance health care directive and you are hospitalized, the health care providers will attempt to contact the following people in this order:
You may think that you can just add the person whom you want to manage your bills onto your bank account, but that isn’t recommended. If that person were to die, your bank account could be subject to his or her creditors. This is not the case with a durable power of attorney. No matter which type of power of attorney you choose, by appointing this person yourself you ensure that the court won’t have the final say in who is in charge of handling your affairs if you are unable to handle them yourself, for whatever reason.
You may find that you will need different types of power of attorney at different times in your life. It’s important to remember that once you die, whatever power of attorney documents you have will no longer be active and you will or trust will take precedence.