Many people know the importance of wills but they neglect to consider a power of attorney (POA). While a will documents how your assets and belongings should be distributed after your death, a POA is used while you are still alive. A POA is a legal document that gives someone else power to make decisions about your property, finances, and/or medical treatments. However, depending on your needs and situation, there are multiple types of POA's. Keep reading to learn which is right for you.

You may want a general POA if you expect to be fully incapable of making financial decisions for a certain period of time. With a general POA, your agent handles banking transactions, taxes, real estate, contacts and other financial decisions. In some cases, you may need this type of POA if you are leaving the country. For example, if you will be out of the country for a few months, you may want a POA to file your taxes or manage your property.

Many older Americans use general POAs because they are no longer able to manage their finances themselves. Similarly, a general POA may be the right choice if you expect to be sick from an illness or treatment for illness. The general POA automatically ends if you become incapacitated unless specifically stated otherwise. 

A durable POA is used for healthcare purposes in the event you become unable to make medical decisions. A durable POA becomes active immediately, and it remains in effect if you become incapacitated. Ideally, you should create your POA (or at least talk to your family) before you are fully incapacitated, so you can choose your agent. Confusion can lead to family fights or the court appointing someone you don't want to be your agent.

A durable POA does not give anyone power over your finances, taxes, banking information, real estate, etc. It is only used for the agent to make medical decisions on your behalf.

Similar to a durable POA, a springing POA details how you want your medical decisions handled if you are incapacitated. However, this type of POA only goes into effect if you become incapacitated. Unlike a durable POA, a springing POA can also include financial decisions.

Springing POAs are also common for members of the military. With a springing POA in effect, your spouse or family automatically takes over your financial decisions if you are suddenly deployed. Regardless of why you are choosing a springing POA, however, make sure to work with your attorney to determine your definition of incapacitated and when the agent should take over.

Limited Power of Attorney 

In some situations, a limited POA or special POA is the right choice. As with a general POA, you may need a limited POA when you won't be able to manage some of your finances. However, instead of giving the agent blanket power to control all your finances, a limited POA only gives the agent control of specific areas.

Perhaps you own property in another country. A limited POA allows you to give someone else control over the property to manage it on your behalf. Of course, you wouldn't want the agent having power over your taxes and banking transactions, so a general POA is the wrong choice. When creating your limited POA, clearly detail what is and is not included in the agreement.

A power of attorney is a useful document to help when you can't make your own financial and/or medical decisions. It's incredibly important you choose your agent carefully, and make sure you choose a qualified attorney to ensure everything is official. If you would like to learn more, contact us at David Naumann & Associates today.