Power of attorney: Understanding what it means
A general power of attorney is a legal document that appoints one or more people (or even an organization) to make financial and legal decisions for you, often for a specific purpose and for a specific period of time.
Your agent (the person you want to manage your affairs) is given permission to act on your behalf. This means they can do one or even many different things such as:
- Pay everyday expenses
- Authority to use your bank accounts
- Make investment decisions
- Sell your property
- Paying your taxes
- Make mortgage payments
- Run your business
As soon as you sign the POA over to your agent, they have the authority to act on your behalf as specified in the document's start and end dates. For example, if you need someone to run your business while you are traveling out of the country for the next two months, you can create a POA for the period that you are away.
However, it's important to note that with a general POA, your document becomes invalid if you were to become incapacitated, and at that time, your agent will lose all legal capacity to continue to act on your behalf. Your agent's powers also stop if they become bankrupt, chose to resign, or if you die.
If you're looking for a POA that grants someone permission to make medical decisions according to your wishes, and carry out the instructions in your living will if you were to become unconscious or incapacitated and unable to speak for yourself, then your estate plan should include a healthcare and/or a durable power of attorney with a medical directive.
For more information on estate planning, visit the Protective Learning Center.