The 4 types of Power of Attorney
In my last post, I talked about Power of Attorney and the importance of having an updated one. Many of you know that I have served as my brother’s Advance Health Care Directive this year and ultimately had to make the decision to take him off life support. The decision was incredibly hard, but it was compounded with the fact that his paperwork wasn’t up to date. He’s now been gone over a month and we are still dealing with the fall out of his paperwork not being current.
I thought I would take the time to talk about the 4 types of Power of Attorney and encourage you to look at yours.
There are four main types of Power of Attorney: 1. Limited Power of Attorney, 2. General Power of Attorney, 3. Durable Power of Attorney and 4. Springing Power of Attorney. They each do different things and picking the right one for you may require seeking the advice of an Estate Attorney. I have utilized an Estate Attorney during the ordeal with my brother and found it invaluable.
Limited Power of Attorney – This allows you to appoint someone for a specific purpose or time to do things for you. For example, your tax professional often has a limited power of attorney for you to talk to the IRS. It generally states a specific time period and is usually specific to what tax forms can be discussed.
General Power of Attorney – This can be an all-inclusive Power of Attorney. You are appointing someone to have the power to make decisions, often financial decisions, on your behalf. This POA allows decisions to be made by the other person even if you are able to make decisions – you are just choosing not to be the decision maker.
Durable Power of Attorney – This POA is the one that gives power to an agent of your choosing even after you’ve become incapacitated. A common example of this one is a person that has been diagnosed with early stage Alzheimer’s and you want to ensure yours needs are met now and when you become incapacitated.
Springing Power of Attorney – This POA does the same thing as the Durable POA, but the power isn’t given until you ARE incapacitated. Incapacitated can mean different things to different people, so I want to encourage you to seek guidance and spell out what it means for you.
My parents have a Springing Power of Attorney and they have stipulated those 2 doctors have to agree they are incapacitated before the POA goes into effect.
I am in no way giving legal advice here, but I am trying to encourage you to think through this tough subject and project you, your family and your business. Once again, I come to you with this question – If you were to get sick and not be able to work on your business – Who is in charge? Who takes care of your clients? Who keeps the business alive until you are back in action?