What Do We Mean By ‘Power of Attorney?

What Do We Mean By ‘Power of Attorney?

A power of attorney (POA) is a legal document that allows an individual (the agent) to act on another person’s (the principal) behalf for a set of predefined legal matters. Let’s talk about the role that it plays in your everyday decisions.

How Does A POA Work?

The agent can make decisions regarding the principal’s:

  • Property
  • Finances
  • Healthcare

The agent can exercise either broad or limited legal authority, depending on the provisions of the agreement. The POA also allows the agent to sign necessary legal documents and make financial transactions on behalf of the principal in their absence. The POA is mainly used in the events of the principal’s illness and disability.

When Can The POA End?

A POA can be revoked as long as the principal has the capacity to revoke it. Alternatively, if the POA becomes incapacitated, but later regains capacity, then the agent would typically lose their powers under the POA.  A POA is no longer effective once the principal passes away because it’s a lifetime document and has zero effect post death.  If the agent is spouse, then they are typically disqualified from serving as agent after a divorce or separation. However, you can execute a new POA after a divorce naming your ex-spouse as your agent. Of course, you only want to name people who you can wholeheartedly trust, and therefore this is rarely a tactic used by people.

A durable POA allows the agent to continue their duties during incapacity. A ‘springing POA’ AKA a Durable POA with a Springing Power gives the agent authority to act only after the principal becomes incapacitated.  Oftentimes, a spouse will have an immediate power, but other people will be named to only have a springing power.

Is Your Will A POA?

The answer is no. Just because you’ve written out a will, doesn’t mean you can substitute it for a power of attorney. A will only mentions how your property will be distributed after your death. A POA only deals with decisions made while you’re alive.

Durable POA vs Healthcare POA?

A Duable POA typically deals with financial related issues such as bank accounts, insurance, investments, real estate, etc.

A Healthcare POA, also known as a Medical Power of Attorney, deals with decisions related to healthcare of the principal.

Sometimes the principal will name different agents for each of the documents.  For example, they may trust one person with their financial affairs, but another person with their medical decisions. Let’s face it, not all people are great with money, and not all people who are great with money are great with emotions or medical care.

If you’re based in Houston, Austin, or San Antonio—the will lawyers and probate attorneys at Mike Massey Law will help you make essential estate decisions. Learn more about their estate planning services on the website.

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