A power of attorney is a document that allows you to appoint a person
or organization to handle your affairs while you're unavailable or unable
to do so. The person or organization you appoint is referred to as an
"Attorney-in-Fact" or "Agent."
General Power of Attorney
- authorizes your Agent to act on your behalf in a variety of different
Special Power of Attorney
- authorizes your Agent to act on your behalf in specific situations
Health Care Power of Attorney
- allows you to appoint someone to make health care decisions for you
if you're incapacitated.
"Durable" Power of Attorney
-The general, special and health care powers of attorney can all be
made "durable" by adding certain text to the document. This means that
the document will remain in effect or take effect if you become mentally
Revocation of Power of Attorney
- allows you to revoke a power of attorney document.
General Power of Attorney
A general power of attorney is very broad and provides extensive
powers to the person or organization you appoint as your agent. These
powers usually include:
You also have the option to grant the following additional powers to
- Handling banking transactions
- Entering safety deposit boxes
- Handling transactions involving U.S. securities
- Buying and selling property
- Purchasing life insurance
- Settling claims
- Entering into contracts
- Exercising stock rights
- Buying, managing or selling real estate
- Filing tax returns
- Handling matters related to government benefits
A general power of attorney is usually used to allow your agent to handle
all of your affairs during a period of time when you are unable to do
so. For example, when you are travelling out of the state or country
or when you are physically or mentally unable to handle your affairs.
A general power of attorney is frequently included as part of an estate
plan to make sure that you have covered the possibility that you might
need someone to handle your financial affairs if you are unable to do
- Maintaining and operating business interests
- Employing professional assistance
- Making gifts
- Making transfers to revocable ("living") trusts
- Disclaiming interests (this has to do with estate planning strategies
to avoid estate taxes)
Special Power of Attorney
A special power of attorney allows you to give only specific powers
to the person or organization you appoint as your "Agent." For example,
you could authorize someone to sell a car or a house for you.
Many people use the special power of attorney to authorize their
Agent to do one or several of the following:
- Handle banking transactions
- Enter safety deposit boxes
- Handle transactions involving U.S. securities
- Collect debts
- Sell real estate
- Mortgage real estate
- Manage real estate
- Sell personal property
- Borrow money
- Manage business interests
- Handle government issues
- Make financial decisions
- Make estate planning decisions, including gifts
A special power of attorney is often used to allow your Agent to
handle specific situations for you when you are unavailable or unable
to do so. For example, you may be travelling outside the state or country,
or you may be unable to handle a specific situation because of other
commitments, or health reasons.
Health Care Power of Attorney
A Health Care Power of Attorney is a document that allows you to
designate a person (an "Agent") who will have the authority to make
health care decisions on your behalf if you are unconscious, mentally
incompetent, or otherwise unable to make such decisions. In many states
you can also express your wishes regarding whether you wish to receive
"life-sustaining procedures" if you become permanently comatose or terminally
ill, in the Health Care Power of Attorney document. This will help your
agent to know your wishes as he or she makes decisions for you. Even
if you do include this in the document, you should still discuss the
Health Care Power of Attorney with the Agent, expressing your wishes,
values and preferences regarding health care.
A Health Care Power of Attorney is different from a Living Will because
it allows you to appoint someone to make health care decisions for you.
A Living Will only allows you to express your wishes concerning life-sustaining
Both Living Wills and Health Care Powers of Attorney are considered
"Advance Health Care Directives" because you're giving instructions
on what you'd want to happen in the event that you become unable to
make health care decisions in the future. Some states also have a specific
"Advance Health Care Directive" document that combines elements of a
Health Care Power of Attorney and a Living Will. (For a more in-depth
look at Advance Health Care Directives, Health Care Powers of Attorney
and Living Wills, click here.)
Even if you have executed a Health Care Power of Attorney, you still
have the right to give medical directions to physicians and other health
care providers as long as you are able to do so. This document only
becomes effective when you do not have the capacity to give, withdraw
or withhold informed consent regarding your health care.
Durable Power of Attorney
A "durable" power of attorney is actually a general, special or health
care power of attorney that contains special durability provisions.
If you become mentally incompetent while you have a power of attorney
document that's already in effect, a durability provision will allow
the document to stay in effect.
You can also sign a durable power of attorney document to prepare
for the possibility that you may become mentally incompetent due to
illness or an accident. In this case, you would specify that the power
of attorney wouldn't go into effect unless a doctor certifies that you
are mentally incapacitated.
You don't have to choose a lawyer to be your agent, but it is important
to select someone you trust. The relative, friend or business you choose
to be your Agent will be acting on your behalf regarding your financial
or health care issues. You need to choose someone who won't abuse the
powers you grant to them and will look out for your best interests.
In general, an agent is only held responsible for misconduct that's
intentional, not for unknowingly doing something wrong. This type of
protection is included in most power of attorney documents to help encourage
people and organizations to accept the responsibility of being an Agent.
Usually there is no financial incentive to serve as an Agent, most serve
There is always the possibility that the person or organization you
appoint as your Agent either won't be able to serve or will refuse to
serve. That's why you have the option of appointing a Successor Agent
who can take over as Agent if necessary.
Here is an illustration of why appointing a Successor Agent is a
good idea: An elderly husband names his elderly wife as his Agent. After
signing the power of attorney document, they are both diagnosed as having
Alzheimer's disease. The wife becomes mentally incompetent and can't
serve as her husband's Agent. The husband is also mentally incompetent
and can't sign a new power of attorney. If the husband had named a Successor
Agent, he or she could have taken over as Agent.
In order for a power of attorney document to be valid, you must be mentally
competent when you sign it. This means that you must understand the
powers that you are granting to your Agent and the implications of having
someone else make decisions for you. If there is any question about
your mental competence, it's a good idea to have a physician evaluate
you and state in writing that you are competent.
If you have signed a "durable" power of attorney document, it will
either remain in effect or go into effect if you become mentally incompetent.
But how will your mental competence be determined? This is something
that you can spell out in the document. For example, you can name a
physician whom you wish to make the determination. Or, you can require
that two licensed physicians agree on your mental capacity.
Even if your document doesn't set specific requirements, it's still
likely that your Agent will have to get a doctor's written confirmation
of your incompetence. Most businesses and organizations won't allow
your Agent to act on your behalf without it. In some cases, a court
may be required to decide the issue using generally accepted standards.
How does a doctor decide if you're mentally competent? In general,
the doctor will consider whether you have an understanding of the subject
area covered by the Power of Attorney, whether you understand the implications
and importance of the matters involved, and whether you can make and
communicate reasoned choices.
Signing the Document
A power of attorney must be signed by the person granting the authority
(known as the "Principal"). The Principal must be mentally competent
at the time of the signing in order to make the document legally binding.
If there is any question about the Principal's mental competence, a
physician may be asked to certify in writing that the person understands
the document and the consequences of signing the document.
The signature on a power of attorney should also be notarized. Notarization
makes it harder for someone to challenge the validity of the signature.
It also allows the document to be "recorded" for use with real estate
download power of