Forms of Power of Attorney
A power of attorney grants an agent or attorney-in-fact the right to act on another person's behalf. Power of attorney agreements are commonly used in estate planning or in other special circumstances, such as military personnel who are overseas. There are four types of power of attorneys that can be granted, and each type is used for specific purposes.
Limited Power of Attorney
A limited power of attorney authorizes the representing agent to complete a specific task within a specific time frame. For example, if you were out of town and needed to have mortgage paperwork signed to close on a home, limited power of attorney paperwork could be drawn up that allows the power of attorney to sign those documents for you to complete the transaction. The limited power of attorney expires on the date listed on the document or when you, the principle, become incapacitated.
General Power of Attorney
A general power of attorney gives permission to the agent to conduct business on behalf of the principle. A general power of attorney has the same rights as the principle and may complete financial transactions, sign documents and pay bills. Principles should carefully select the attorney in fact when entering into a general power of attorney because of the comprehensive powers it holds. The general power of attorney expires upon death or incapacitation of the principle.
Durable Power of Attorney
A durable power of attorney can be either general or limited in scope; the main difference is a durable power of attorney continues when the principle becomes incapacitated. The durable power of attorney, like the limited and general agreements, also takes effect immediately. The durable power of attorney ends upon the death of the principle.
Springing Power of Attorney
A springing power of attorney is similar to a durable power of attorney, as it grants powers to the agent during the incapacitation of the principle. The main difference is that a springing power of attorney does not go into effect until the principle becomes incapacitated. When entering into a springing power of attorney document, it is important that the standard for determining incapacity be defined within the agreement.
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