There are primarily two different kinds of Power of Attorney: the Financial Power of Attorney and the Healthcare Power of Attorney. Both forms are essential for any individual planning for the future.
A Power of Attorney is a written authorization for an agent or attorney-in-fact to act on behalf of another individual to make decisions. A Power of Attorney is most often used when an individual is unable to manage their affairs due to incapacitation, incompetence, or absence. Under a Power of Attorney, an individual will appoint a designated agent to manage such individual’s financial or medical decisions. It is important to designate an individual you know and trust as your attorney-in-fact. Your agent is expected to keep your best interests in mind as they make decisions on your behalf. Your agent may be a relative, friend, company, or attorney, but whomever you designate as your agent, make sure such individual or entity will respect your wishes, advocate for you, and not abuse the powers granted to them.
The process of designating an attorney-in-fact to act on your behalf can be complex and emotional. There are several types of Powers of Attorney and having legal guidance from an experienced elder law or estate planning attorney can simplify this process and provide you with clarification as to which Power of Attorney meets your needs. Additionally, an experienced elder law or estate planning attorney can ensure your Power of Attorney is recognized by financial and health care institutions when the time comes.
There are several types of Powers of Attorney, each of which varies with respect to the scope of actions the attorney-in-fact may perform on behalf of the individual, the duration of time the attorney-in-fact may act, and when the Power of Attorney shall take effect. For a Power of Attorney to be legally binding, the Power of Attorney must accord to state laws, and in California, the Power of Attorney must be signed in front of a California notary public.
The four types of a Power of Attorney recognized by the State of California are a Durable General Power of Attorney, Non-Durable General Power of Attorney, Limited Power of Attorney, and Healthcare Power of Attorney. Each Power of Attorney recognized by the State of California serves a specific purpose and you do not have to choose the same individual to act as your attorney-in-fact for all your affairs.
A Durable General Power of Attorney, commonly referred to as a Financial Power of Attorney, allows the designated agent to make financial decisions on your behalf. Although you may limit the actions your attorney-in-fact is permitted to make, a Durable General Power of Attorney grants your agent the authority to take custody of your financial assets, maintain accounts, continue operating any business affairs belonging to you or in which you have a substantial interest, manage real estate you may own during your incapacity, and control your digital assets, to name a few. You can designate the Durable General Power of Attorney to become effective immediately upon execution of the document or only upon your incapacity.
A Non-Durable General Power of Attorney is similar to a Durable General Power of Attorney, as it authorizes your designated agent to make financial decisions on your behalf. However, a Non-Durable General Power of Attorney becomes ineffective and void upon your incapacitation. A Non-Durable General Power of Attorney is often used to grant an agent broad decision-making powers in an individual’s absence.
A Limited Power of Attorney does not grant the overarching powers to the designated attorney-in-fact like the Durable General Power of Attorney and Non-Durable General Power of Attorney. A Limited Power of Attorney is used for a specific purpose and the decision-making powers granted are restricted to certain actions only. A Limited Power of Attorney often has a set period of time in which the Limited Power of Attorney is effective and upon completion of such action, the Limited Power of Attorney becomes void. A Limited Power of Attorney is commonly used for real estate transactions. For example, when an individual is closing on a real estate transaction and such individual is unable to attend the closing and execute the closing documents, a Limited Power of Attorney is signed to permit a designated agent to execute the closing documents on the individual’s behalf.
Finally, a Healthcare Power of Attorney, also known as an Advanced Healthcare Directive, authorizes your agent to make health care decisions on your behalf. If you are incapacitated or declared incompetent to make health care decisions on your own by a physician, a Healthcare Power of Attorney is used to designate a trusted individual to be your healthcare advocate and to make healthcare decisions for you. As with the Durable General Power of Attorney, you may elect to have the Healthcare Power of Attorney effective immediately upon execution of the document or effective only upon your incapacity. Under a Healthcare Power of Attorney, your healthcare agent may have the authority to gain access to your medical records, give, withhold, or modify consent to healthcare treatment, authorize relief from pain, make arrangements at your residence or hospital to assure your healthcare needs are provided for, and make decisions on your behalf regarding life-sustaining medical treatments.
A Power of Attorney is a necessary component of any elder care plan. Even when aged loved ones have full control of their mental faculties, they often need help managing their medical care and finances. A Power of Attorney makes it possible for an adult child, relative, or friend to act on behalf of his or her loved ones if necessary.
If a Power of Attorney is not in place upon your incapacity, it can be difficult and stressful for family members to help handle their loved ones’ affairs. Since a Power of Attorney need not be effective immediately, you should have the appropriate type of Power of Attorney, for both your financial as well as healthcare affairs, in place as part of your estate plan for incapacity, so your loved ones can rest easier knowing that your designated agent can step in when the time comes. This authorization provides families with peace of mind knowing that a trusted person is looking out for you. The lack of planning for incapacity will subject you to Conservatorship proceedings, which is a lengthy, complicated, expensive, and unpleasant court process.
Be proactive. Call our office now to schedule a time with one of our qualified attorneys to assist you with your planning before it’s too late.
For assistance in developing a power of attorney, contact an elder law attorney at Desert Law Group either by calling 760-481-1144 or by filling out the contact form below.