A Power of Attorney (POA) is a useful and necessary document for handling financial matters for someone else. When circumstances dictate that you are physically or mentally unable or incapable of handling your own financial and legal affairs, it’s a good idea to have a Power of Attorney in place. A POA appoints someone you trust to act as your attorney-in-fact, sometimes referred to as your ‘agent,’ in your stead.
A Power of Attorney is not a “one size fits all” type of document. It’s important to know and understand the differences between the different types of POAs and to choose one based on your specific wants and needs.
GENERAL POWER OF ATTORNEY: This document gives your attorney-in-fact the rights to make your legal and financial decisions as though you were there to make them yourself. Your attorney-in-fact, or agent, will thus be able to pay your bills, file your tax return, handle your pension, investments, etc. You may authorize a General POA to an agent if you are not incapacitated but still need someone to help you with these matters, such as while you are away on a long trip or serving overseas. A general POA usually becomes active the day you sign it, and you may rescind it at any time. Otherwise it will end upon your death. Also, most General POAs are considered “nondurable” powers of attorney, which automatically end if you lose mental capacity, or are declared incompetent.
LIMITED POWER OF ATTORNEY: This document is drawn up to give your agent the power to act on your behalf for a set limited purpose or time. For example, you may be selling real estate in another part of the country and are unable to attend the closing. A Limited POA gives your agent the power to sign a deed and/or other closing documents for you, and handle any financial transactions or banking needs as a result of the sale. This document usually terminates at the end of the specified action, at which time your appointed agent’s power is revoked.
DURABLE POWER OF ATTORNEY: With a Durable POA, you may appoint your agent or agents to handle specific legal and financial responsibilities in the event you should become incapacitated or incompetent to care for yourself and your own.
A Durable Springing POA gives your agent the authority to make legal/financial decisions on your behalf only if you become mentally or physically incapacitated or unconscious. It can be written so that the transfer of responsibilities only goes into effect when you become unable to tend to your affairs. Until that point arrives, you may choose to continue making decisions on your own.
Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial and estate planning. He also practices elder law planning, corporate law, Medicaid planning, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Bill will be happy to review your current estate plan and can give you the peace of mind that your financial well-being will be taken care of in case of an emergency situation.