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What Are the Different Types of Power of Attorney?

A power of attorney (POA) is a legal document that allows you to appoint someone you trust to act on your behalf in different situations.

You draft these instruments when planning for the future or needing assistance with specific tasks.

Let’s explore some common POAs used in estate planning so you’ll know which one best suits your needs when the time comes.

Why Draft Power of Attorneys When Planning an Estate?

Life can be unpredictable, and there may come a time when you cannot make decisions or manage your affairs due to illness, injury, or absence.

By empowering a trusted agent through a POA, you ensure that someone you know will handle your financial and healthcare matters according to your wishes.

A well-crafted power of attorney can help you:

  • Manage your finances and property, including bank accounts, investments, and real estate.
  • Assign someone to make healthcare decisions on your behalf, guaranteeing that doctors respect your medical preferences.
  • Pay your bills and protect your assets when you cannot do so yourself.
  • Avoid the need for court intervention or guardianship proceedings in the event of incapacitation, which can be time-consuming and expensive.

1. Durable Power of Attorney

This legal document remains in effect after the principal (the person granting the authority) becomes incapacitated.

Here, your chosen agent (appointed to act on your behalf) will make your financial and healthcare decisions for you and protect your interests during this challenging time.

Key features of a durable POA include:

  • Remains in effect during the principal’s incapacitation, providing uninterrupted management of affairs.
  • Allows the agent to handle financial and healthcare matters, as specified in the document.
  • Can be revoked or modified by the principal at any time, as long as they are mentally competent.
  • Knowing that your chosen agent will support you when needed.

To create a valid durable POA in North Carolina, you must:

  1. Be at least 18 years old and mentally competent when signing.
  2. Sign the document in the presence of a notary public, ensuring its legal validity.
  3. Name a trusted individual as your agent, someone who will act in your best interests.

2. General Power of Attorney

A general POA grants broad authority to agents while allowing them to handle several tasks on your behalf.

It’s useful when you need someone to manage your affairs temporarily while you’re unavailable or unable to do so yourself, such as during an extended trip or a period of illness.

A general POA can authorize your agent to:

  • Manage your financial accounts, including bank accounts, investments, and retirement funds.
  • Buy, sell, or lease real estate on your behalf, handling property transactions as needed.
  • Handle your business operations, making decisions related to your company or professional interests.
  • Make legal decisions and enter into contracts, acting as your representative in legal matters.

However, you must choose an agent you trust when granting general POA authority. Because your fiduciary will have extensive control over your affairs, a mal-selected agent could potentially abuse his or her powers.

Additionally, it’s important to note that a general POA typically ends if the principal becomes incapacitated unless you specifically make it durable in its terms.

3. Limited or Special Power of Attorney

A limited or special power of attorney grants authority to your agent for specific tasks or transactions only.

This POA is useful when you need assistance with only one matter, allowing you to maintain control over your other affairs.

Common examples of limited or special POAs include:

  • Buying or selling a specific piece of real estate, such as a vacation home or investment property.
  • Managing certain banking transactions, like opening a new account or transferring funds.
  • Handling a particular business operation, such as signing contracts or managing employees.

A limited POA restricts your agent’s power to only the specified areas, providing an extra layer of protection for your interests.

Used mostly in business or real estate transactions, its narrow scope of authority allows your agent to complete a single task or deal.

4. Springing Power of Attorney

This POA “springs” into action upon a specific triggering event, such as the principal’s incapacitation.

It’s useful when you want to ensure that your agent’s authority only begins when you can no longer make decisions for yourself, providing an added level of control over your affairs.

However, there are some challenges associated with springing POAs that you should consider:

  1. Determining incapacitation can be difficult and may require a medical professional’s assessment, which can delay your agent’s ability to act on your behalf.
  2. Some financial institutions may be hesitant to accept a springing POA due to the uncertainty surrounding the triggering event, potentially limiting your agent’s effectiveness.
  3. The agent’s powers may be delayed while authorities obtain proof of incapacitation, which can be problematic in time-sensitive situations.

Despite these challenges, springing POAs can be a valuable tool in your estate planning arsenal, providing peace of mind that someone will manage your affairs when you cannot do so yourself.

5. Medical Power of Attorney

A medical or healthcare power of attorney allows your agent to make medical decisions on your behalf when you become incapacitated and unable to communicate your wishes.

Healthcare POAs are elements of your advance directive and a living will, which outlines your preferences for end-of-life care.

When creating a medical POA, you must:

  1. Choose a trusted agent who understands your healthcare preferences and will advocate for your wishes.
  2. Discuss your end-of-life intent with your agent and family members, ensuring everyone is on the same page.
  3. Ensure your healthcare providers hold a copy of the document, allowing them to work with your agent.

A medical POA can authorize your agent to:

  • Make decisions about your medical treatment, including the use of life-sustaining measures.
  • Consent to or refuse specific procedures, such as surgery or medication.
  • Access your medical records, giving them the information needed to make informed decisions.
  • Communicate with your healthcare providers, advocating and ensuring doctors respect your wishes.

You can guarantee that your healthcare wishes happen with a properly executed medical POA, even when you’re unable to advocate for yourself due to incapacitation or illness.

Ensuring Your Power of Attorney Is Legally Valid in North Carolina

To be enforceable in North Carolina, your power of attorney documents must be legally valid and meet certain statutory requirements:

  1. The principal must be at least 18 years old and mentally competent when executing the POA.
  2. A notary public must sign the POA to confirm signatures.
  3. You must clearly name and define the agent’s authority, leaving no room for ambiguity.

CARY ESTATE PLANNING in North Carolina highly recommends consulting with one of our estate lawyers before drafting your power of attorney.

An experienced estate planning attorney can guide you through the process, ensure that your document is legally binding, and help you understand the implications of each type of POA.

We also help you comply with any state-specific requirements or considerations.

POA Modifications

If your circumstances change or you wish to void a power of attorney authority, you can revoke or change the document by:

  • Creating a new POA that voids the previous one.
  • Destroying all copies of the original POA prevents discovery or potential misuse.
  • Notifying your agent and any relevant third parties of the revocation, ensuring everyone is aware of the change.

Choosing the Right Power of Attorney for Your Unique Situation

Consider your needs and circumstances when deciding which power of attorney suits you.

Ask yourself the following questions:

  • Do you need assistance with a specific task or transaction or require broader authority?
  • Do you want your agent’s authority to continue even if you become incapacitated, or do you prefer more control?
  • Are you primarily concerned with healthcare decisions, or do you need help with financial matters as well?

Answering these questions can help determine whether a durable, general, limited, springing, or medical POA best fits your situation.

Selecting a responsible and trustworthy agent who will act in your best interests and communicate your decisions with your family is important.

Protect Your Future with a Comprehensive Estate Plan

Finally, you should always include different POA documents in your comprehensive estate plan.

You guarantee that people and entities will honor your financial and healthcare needs when appointing a trusted agent and clearly defining authority in the face of unexpected challenges.

Don’t leave your future to chance. Contact our North Carolina estate planning lawyers to discuss your options and learn more about how a POA can give you peace of mind.

Author Bio

Paul Yokabitus

Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.

Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.

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