What Is Power of Attorney?

A close-up of a man signing a power of attorney agreement after receiving advice from Funeralocity in New Orleans, LA

Power of attorney (POA) is a method of giving someone the authorization to represent or act on behalf of another person in his or her legal and financial matters. For people who are thinking about end-of-life planning, a POA is an important document. Here’s a simple guide to help you understand why you would need a POA.

The person who gives POA is the “grantor” or “principal,” and the person acting on behalf of the grantor is the “agent” or “attorney-in-fact.” To create a power of attorney, the grantor must be of sound mind and cannot be incapacitated. A POA written by someone who is deemed mentally incompetent will be invalid.

The POA allows the agent to take care of various tasks, such as paying bills, managing bank accounts, handling property transactions, filing taxes, and even making funeral arrangements. Some financial agencies will only accept a POA written on their specific forms, so the grantor may have to complete several POA documents.

The cost of creating a POA can be anywhere from $50 to $1,000 depending on the grantor’s needs, the type of POA, and legal fees. Some POA templates are free to download online, but an experienced legal professional can help you choose the right POA document for your situation.

Durable Power of Attorney

A POA usually becomes invalid if the grantor is deemed incapacitated due to an accident or illness. A durable power of attorney (DPOA), however, is still effective even when the grantor is considered mentally incompetent. If you don’t have a DPOA and end up incapacitated or otherwise unable to manage your affairs, the courts can appoint a guardian or conservator to manage your estate.

Healthcare Power of Attorney

A healthcare POA authorizes your agent to make decisions regarding your health and medical treatment if you are unable to do so for yourself. Each state has different legal requirements for determining the validity of a healthcare POA. Make sure that you understand the guidelines about what kind of medical decisions are allowed and the overall validity of your POA.

Some people combine living wills, advance healthcare directives, and a healthcare POA to communicate their wishes regarding medical treatment.

Special Power of Attorney

A special (or limited) POA gives the agent the power to act on behalf of the grantor for specific purposes. For example, if you are buying a house but can’t close the deal in person, a special POA can give your agent authorization to finalize the transaction and sign the deed.

Springing Power of Attorney

A springing power of attorney only comes into effect (“springs” into action) after the grantor becomes incapacitated or when a specified date or event occurs. When creating a springing POA, the grantor must clearly state the event or date that allows the POA to become active. Keep in mind that a springing POA is not automatic, and it can be difficult to determine whether the grantor is truly incapacitated.

Choosing an Agent

Choosing an agent for the POA can be a tough decision. They don’t have to be an attorney, so a family member or a close friend can perform the role if they are trustworthy and organized. Make sure that you discuss your decision with them and fully inform them of the details. You should also have a few backup agents in mind in case your first choice can’t commit.

You can always revoke a power of attorney if things change or a conflict of interest arises. However, to get a revocation of a POA, the grantor must be mentally competent and have the cancellation witnessed or notarized to ensure its validity.

End-of-Life Planning Documents

Power of attorney is just one of the documents often included in end-of-life planning. A will is also an essential component of estate planning and funeral pre-arrangements. Here’s a simple checklist to help you get started on making a will.

Once you’ve decided on a POA and are ready to make funeral arrangements, Funeralocity can help you make an informed choice. Learn more about our services by visiting our FAQs page.

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