In certain circumstances, you may find yourself unable to execute important financial, family or medical decisions. This could be due to various reasons such as physical or mental incapacitation, being out of the country or simply not having the time or expertise to handle certain matters.
Fortunately, a power of attorney can provide a solution. However, you should understand how different types of power of attorney work for different scenarios.
What duties can an agent handle?
Virginia law outlines the statutes governing powers of attorney in its Uniform Power of Attorney Act. When you create a power of attorney, the document refers to you as the “principal.” The person you assign to handle affairs on your behalf is the “agent.” Depending on the particular type of power of attorney, you can assign the agent authority over finances, medical decisions or even care of your children.
An agent’s responsibilities can be significant and involve decisions that directly impact your well-being and interests. Therefore, you must carefully consider who you choose as an agent. You need someone who is not only trustworthy but also capable of handling the designated responsibilities.
How does a power of attorney define or restrict the power of the agent?
A power of attorney for finances or medical decisions can fall into four categories:
- General power of attorney: With a general power of attorney, you grant the agent broad powers to act for you in various matters. This may include managing finances, making legal decisions and entering into contracts.
- Limited power of attorney: A limited power of attorney restricts the agent’s authority to specific matters or a particular period. People commonly use this type of power of attorney for things like selling a property or handling a business transaction.
- Durable power of attorney: A durable power of attorney remains effective even if an accident or health issue incapacitates you. Therefore, the agent’s authority continues to be valid and enforceable, allowing them to make decisions for you and provide continuity for your affairs.
- Springing power of attorney: A springing power of attorney only becomes effective under specific conditions or at a future date that you specify. You could use this document to ensure that your agent’s authority only begins when a certain event occurs.
Be aware that an agent’s power ceases with your death, making a power of attorney only one element of comprehensive estate planning.
Clearly, your agent can have a large scope of authority, so you have to carefully choose your agent and the right type of power of attorney. By making an informed decision, you can gain peace of mind, knowing your interests and well-being are in capable hands.