Power of Attorney
What is a Power of Attorney?
If you have power of attorney for a specific person, that means you have the legal authority to act and make decisions for that person. A power of attorney is only legal and enforceable if it was signed by a person that was “of sound mind.” This means that the person signing the power of attorney must be of good mental health and must understand the potential consequences of what they’re signing. Because of this, it’s important that you plan ahead. If you have an elderly parent that you need to get power of attorney for, for example, you will need them to sign this power of attorney while they are in good health.
Types of Powers of Attorney
There are several different types of powers of attorney. For example, if you have a limited power of attorney you have the legal authority to make specific kinds of decisions, like sign over the title of a home or access a bank account. A limited power of attorney usually expires on a certain date, or when a certain goal is accomplished.
A general power of attorney, on the other hand, gives you much broader powers and responsibilities. A general power of attorney can give you the authority to do all of the following on behalf of another person:
- Buy and sell property
- Manage finances
- Buy, manage, or sell property
- File tax returns
- Apply for government benefits (social security, Medicaid, Medicare, etc.)
- Enter into contracts
- Settle debts, lawsuits, and other claims
- Maintain business interests
- Transfer and gift assets
- Make medical decisions
Additionally, unlike limited powers of attorney that expire, general powers of attorney often do not. This is called a “durable power of attorney.” This means that it will remain in effect even after someone becomes incapacitated or is mentally incapable of making sound decisions.