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Power of Attorney Agreements: Ensuring the Right People Make Important Decisions

Power of Attorney Agreements: Ensuring the Right People Make Important Decisions

Attorney is looking at an agreement with his client

Power of Attorney (POA) agreements are important legal documents that allow people to choose the right persons to make important decisions on their behalf. If someone becomes incapacitated, a POA can give someone else power over financial and medical decisions. A POA goes beyond finances and health care — it’s also critical for legal and personal matters.

Types of POA Agreements

Medical Power of Attorney or Durable Power of Attorney for Health Care

A Medical POA also known as a Power of Attorney for Health Care allows a person to name someone else to make medical decisions on his or her behalf. The appointed person is referred to as a Health Care Agent. This person is sometimes known as a “proxy” or “attorney-in-fact”.

The person granting the authority is called the Principal. The principal can grant certain medical powers to the Agent, but cannot give away his or her rights under the law.

General Power of Attorney

With a general POA, the principal can authorize the agent to act on his or her behalf in all situations allowed by the law. These powers entail executing duties related to legal, health, business, and financial matters.  These powers can also be limited to specific activities.

These POAs could either be durable or non-durable. The POA allows the agent considerable power over the principal’s affairs, but with some limitations. The agent cannot, for instance, make changes to the principal’s Will.

Financial Power of Attorney 

A financial POA does most of what a General POA can do. However, it specifically allows the agent to make financial decisions on the principal’s behalf. This document includes language giving the power to invest, change investments, sell a property, and take out loans.

Durable Power of Attorney

A durable POA gives the agent the authority to keep acting on the principal’s behalf in the event of the principal’s incapacity. Sometimes, courts presume POAs to be durable unless otherwise specified.  In Illinois, a Durable Power of Attorney must follow the statutory form.

The principal needs to state in the document explicitly if he or she wants the POA to be durable. Doing so can avoid confusion in the future.

Springing Power of Attorney

A springing POA allows the agent to act on the principal’s behalf after a specific condition is met. It comes into force upon the happening of some event such as incapacitation of the principal or inability to act independently.

An estate planning attorney can be a great resource when it comes to the technical language required for these documents. The attorney can also draw up an estate planning document that addresses the desires and concerns of the principal.

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