Executor, Estate Planning

What is a Power of Attorney and Why Should You Consider It?

A Power of Attorney (POA) is a document that allows you to appoint a person or entity to manage your affairs if you become unable to do so. There are many types of POAs with varying implications for the level of control the attorney-in-fact or agent (the person acting on your behalf) will have.

Types of Power of Attorneys

Limited Power of Attorney – A limited power of attorney allows the attorney-in-fact to act in your stead on a specific and limited purpose. For example, you can give someone a limited power of attorney to sign a property deed if you are out of the country. A limited power of attorney typically ends at a date specified within the power of attorney documentation.

General Power of Attorney – A general power of attorney gives the agent broad powers to make financial, medical, business and legal decisions on your behalf. You can use a general power of attorney if you are not incapacitated, but still need someone to help you manage your affairs. You may revoke a general power attorney as long as you are of sound mind. Otherwise, a general power of attorney ends when you die or if you become incapacitated.

Durable Power of Attorney – A durable power of attorney can be either limited or broad in scope, but stays in effect in the event you become incapacitated. If you do not specify a durable power of attorney and you become incapacitated, nobody can act on your behalf until the court appoints them to do so. A durable power of attorney ends at death unless revoked before you become incapacitated.

Springing Power of Attorney – Like a durable power of attorney, a springing power of attorney allows an agent to act on your behalf if you become incapacitated. Unlike a durable power of attorney, it only goes into effect after you become incapacitated. It is vital to include clear instructions for determining incapacity and thereby trigger the power of attorney.

Medical Power of Attorney – A medical power of attorney allows an agent to make healthcare decisions for you in the event you become unable to make them yourself. A medical power of attorney is a type of springing power of attorney. As long as you are conscious and of sound mind and body, the medical power of attorney does not go into effect.

Why You Should Consider a Power of Attorney

A person has to set up a power of attorney him- or herself. If he or she is no longer of sound mind or body, their family cannot set up a POA after the fact. In the event a person becomes incapacitated and does not have a POA set up, the court appoints a guardian or conservator. Once the court appoints a guardian, the family has no control over their loved one’s affairs.

Fifth Third Bank does not provide tax or legal advice. Please consult your tax adviser or attorney before making any decisions or taking any action based on this information. This information is provided for educational purposes only and does not constitute the rendering of tax or legal advice.

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