General Powers of Attorney
A power of attorney is a written instrument by which the principal appoints another person to perform certain specified acts his/her behalf. This document gives power to a designated agent, called an “attorney-in-fact” hence the name, “power of attorney.”
A power of attorney may also be “durable.” This means that its authority endures the disability of the principal. Although many state statutes have eliminated a requirement that a power of attorney explicitly state that it is durable to be durable. Nonetheless, it is common for a power of attorney including a durability provision to be captioned “General Durable Power of Attorney.
There are two basic types of powers of attorney: the general, which grants the agent power to deal with all your assets and to take any action on your behalf; and the special which allows the agent to perform only certain acts or to control specific property. For example, a limited power of attorney might be used to execute a real estate transaction or to fund a revocable trust. Other powers of attorney may allow a principal to “check the box” granting or withholding powers to the agent. In estate planning it is often important to decide when a power of appointment is effective and whether to grant the principal a degree of gifting powers. (Gifting powers may be helpful when planning for Medicaid qualification or estate tax minimization.)
The principal determines when a power of attorney becomes effective. The principal may specify that the power of attorney is immediately effective or that the power only springs to life upon the occurrence of certain events. A common trigger in this type of springing power is the disability of the principal as determined by two physicians, a court or the disappearance of the principal for a specified duration.
A General Power of Attorney may be useful in managing a disabled person’s assets and avoiding a Court Conservatorship.