what is a power of attorney?
A Power of Attorney (POA) is a legal document that allows you, the principal, to nominate an agent who can represent you in legal matters. With a POA you can decide in which legal matters your agent can represent you. For example, you might specify that your agent only has the power to conduct matters that pertain to your real estate, file income tax forms; deposit, borrow, or transfer money in banking transactions, handle insurance claims, et cetera. A Limited POA gives an agent legal rights to handle certain matters. A General POA gives the agent the power to handle any and all business matters.
POA For Business
Businesses commonly use POA documents. They are useful because they allow a friend or family member to continue business even if you are away. Many people think that their spouse is automatically granted the right to represent them in legal affairs. This is incorrect. Spouses usually have certain legal rights over matters jointly owned, such as joint bank accounts. But, that is usually the extent of their ability to legally act on your behalf.
POAs are limited, though, in that they do not provide power in case you are incapacitated. This limitation means your company's accounts may not be accessible and others may not make large decisions. A durable power of attorney can keep your company from being killed.
What is a durable power of attorney
There is a second type of Power of Attorney document you can have that comes into effect only when you are incapacitated or disabled and you cannot handle your own affairs. It's called a Durable Power of Attorney.
Life is full of unforeseen circumstances and difficult decisions. A DPOA is a way for you to plan for an unknown future and to protect your loved ones. It allows you to appoint someone you trust to handle your legal affairs after you are unable to carry them out yourself. If you do not have a DPOA, the state appoints someone to take care of your business and assets. Even if your spouse is fully capable of handling decisions about your finances while you are incapacitated a judge could appoint someone else whom you have never met to handle your affairs.
It is important to understand that only a DPOA extends to financial decisions after you are too ill to express your wishes or are incapacitated.
It is also comforting to know that a DPOA only comes into effect upon circumstances of your choosing. It can be as specific or as broad as you wish it to be. Please note that a DPOA does not take end-of-life decisions such as whether you wish to extend your life with modern medicine such as breathing tubes, dialysis, surgery, etc. For those decisions you should have an Advanced Healthcare Directive (AHCD). Most people have an AHCD and a DPOA so that both the business and the personal end-of-life decisions can be made in accordance with their wishes.