Understanding Power of Attorney

An essential tool in the realm of estate planning is the "Power of Attorney." A Power of Attorney (POA) is a legal document that grants another person, known as the "agent" or "attorney-in-fact," the authority to make decisions and take actions on your behalf. This authorization can be broad or specific, depending on your needs and preferences. The person who creates the Power of Attorney is referred to as the "principal." The powers granted through a POA can encompass financial, legal, medical, and other important matters.

A general POA gives the agent broad authority to manage various aspects of the principal's affairs, from financial matters to legal decisions. It is often used when the principal wants someone to act on their behalf for a specific period, such as during a temporary absence.

However, a POA can also be limited. Here, the agent is granted specific powers for a particular purpose. For instance, a limited POA could allow an agent to sell a property on the principal's behalf but forbid them from buying new property.

A POA can also become effective immediately or at a later date (generally when the principal becomes incapacitated due to injury, illness, or age. Having a POA in place before that happens ensures continuity in your financial affairs. Who will pay your bills if you are physically incapable of doing so? Who will make your healthcare decisions?

With a well-drafted Power of Attorney, you can specify the extent and limitations of your agent's powers. This ensures that your wishes are respected and that your agent acts within the boundaries you've set.