A power of attorney (POA) is a legal document that permits an agent to make certain decisions on behalf of someone else, particularly should that person become incapacitated. The decision-making party is referred to as the agent.
The types of decision-making authority largely depend on the specific request of the principal. Outlined below are three of the most common types of POA.
1. Financial POA
When someone is elderly or vulnerable, they may struggle to stay on top of their finances. For example, they may fall behind with tax bills. They may forget to cash checks or sign them. This is where a financial POA comes in.
A financial POA can make all kinds of financial decisions that meet the best interests of the principal. They can deposit money, sign checks and even make transactions on the principal’s behalf.
2. Health care POA
Estate planning isn’t all about money and assets. Sometimes, a principal needs to ensure that they are getting the right medical treatment. Should they become incapacitated, they will need someone to do this on their behalf- a health care POA.
The healthcare POA can consent to or refuse certain medical treatments. The idea is that any decisions made match the wishes of the principal prior to incapacitation.
3. General POA
Sometimes, the principal will require a combination of both a health care and financial POA. A general POA can have broader decision-making authority. As long as state law allows it, a general POA can act on behalf of the principal on numerous issues, or just one or two issues.
Part of the appeal of POAs is that they are flexible. To make sure your interests are protected, it may be beneficial to seek legal guidance.