Letting another person act on your behalf may not be an easy concept but it’s sometimes the wisest thing to do if you want to safeguard your loved ones’ future. If you’re wondering why, here’s an example.

Assume you have many assets you’re in charge of, like businesses, properties or bank accounts. Who will take care of them in your absence? You may wonder why you would give over ownership to another person when you’re healthy and able. But life can take unexpected turns. That’s where power of attorney (POA) comes in. Being aware of this legal document and understanding its various forms/types may help you in the future.

What Is Power of Attorney?

It’s a legal form required if you (the principal) want to grant someone else (the agent) the power and authority to sign legal documents on your behalf. It can either permit complete authority or can be restricted to some acts or a certain time period. For instance, full POA is when someone has allowed you to make all decisions on their behalf and in their best interest. Limited POA is when they’ve granted you that right for a certain period of time. There are other types of POA specific to your needs and meant for different purposes. Keep reading to learn what they are.

Understanding Different Types of POA

There are several different types of POA and understanding them will help you choose the best one for you. Our real estate lawyers will walk you through the various types:

• General Power of Attorney

A general power of attorney is usually part of an estate plan. It permits your agent to handle your financial decisions and transactions for a limited period. You can also use this when you’re traveling and certain work needs to be completed before a specific date. With this right, your agent can purchase, sell or rent your property; file tax returns; get life insurance; transfer money to your business interests; or handle stock rights and banking transactions.

• Limited Power of Attorney

This is a special power of attorney that gives your agent the right to act on your behalf in specific situations. Hence, it comes with an expiration date. You can, for instance, give your agent the power to buy or sell a property if it needs to be done within a certain date and you’re physically absent or sick. They can also take care of your business interests, manage banking transactions, make financial decisions, collect debts or borrow money.

• Healthcare Power of Attorney

Also known as medical power of attorney, this POA lets your agent make a decision for you when you’re unable to do so. This is usually when you’re undergoing surgery and aren’t able to make decisions. However, it doesn’t restrict you from giving medical direction to your doctors when you’re capable. It only becomes valid and effective when you’re unfit.

Important Note: If you have mental health issues, healthcare organizations won’t allow your agent to make decisions for you without your doctor’s consent.

• Enduring Power of Attorney

Also termed a continuing power of attorney, this gives your agent the right to make decisions for you when you’re mentally incapable of doing so. They’re only allowed to exercise the same powers you are. For instance, if you’re in a coma and can’t sign a contract, your agent can’t either. Hence, you should always assign someone trustworthy to act on your behalf to prevent future frauds.

• Springing Power of Attorney

If you’re uncomfortable giving the right or power to a family member to act on your behalf when you’re healthy, consider springing power of attorney. This only takes hold upon a particular event or health condition. Though it may look like a wise option, it can become complicated if the situation is a formal determination of your inability; that’s when you will require your doctor to declare your incapacity. But this POA may not be applicable everywhere which is why you should consult your lawyer for the best guidance.

Whether you’re healthy or sick, giving power of attorney to an agent is rarely a bad decision. It’s certainly better than waiting for a mishap to occur that takes away your decision-making power. In this way you can protect your property and assets even when you’re absent or unwell. Be careful choosing an agent as they’re responsible for acting on your behalf. Make sure you choose someone trustworthy so unexpected problems don’t affect your life and loved ones. Seek out a reputable lawyer if you want more information about which POA to choose. In this way, you’re in safer hands.