A Power of Attorney is a document in which one person, known as the Principal, gives authority to another person, known as an Attorney-in-Fact or Agent, to do certain things on behalf of the Principal. You can think of a Power of Attorney as a document that authorizes another person to step into your shoes to do certain things as if they were you.
There are several types of Powers of Attorney:
A Power of Attorney can be Limited or General. A Limited Power of Attorney is a Power of Attorney that limits the Attorney-in-Fact’s authority to only specific, listed activities, such as authority to purchase a car or authority to access a specific bank account. A General Power of Attorney is not limited to specific activities – it gives very broad authority for the Attorney-in-Fact to do almost anything the Principal could do if he or she were acting for themselves.
A Power of Attorney can be Immediate or Springing. An Immediate Power of Attorney is active and the Attorney-in-Fact has authority immediately upon the Principal signing the Power of Attorney. A Springing Power of Attorney is not in effect immediately and only becomes active if and when a named event occurs - then the Power of Attorney “springs” into life and is an active delegation of authority to the Attorney-in-Fact. In most cases, the triggering event for a Springing Power of Attorney is the incompetency of the Principal. This means that while the Principal is competent, he or she will manage their own affairs, but upon the Principal experiencing an injury, illness or disease that renders him or her incompetent, the Springing Power of Attorney becomes active and the Attorney-in-Fact will have authority to do things on behalf of the incompetent Principal.
If you need help with a very specific transaction or a small number of identifiable transactions, usually an Immediate Limited Power of Attorney is the appropriate choice. If you are currently receiving assistance from another to manage your finances or assets, or you travel extensively, or you are stationed with the military or assigned with your employment away from your family, probably an Immediate General Power of Attorney is your best option. If, however, none of the above situations describes you, then you probably will be best served by a General Springing Power of Attorney. A General Springing Power of Attorney allows you to maintain sole control of your decisions and assets (without someone else having the ability to do things on your behalf) as long as you are competent, but if you were to be injured or become ill, someone you have selected ahead of time can step into your shoes and have very broad authority to help you with your decisions and assets. And, once you have recovered and are competent to manage your own affairs, your General Springing Power of Attorney will become inactive and you will again manage your own affairs.
If you have additional questions regarding Powers of Attorney, or want to learn how to create a Power of Attorney that fits your situation, contact Mountain View Law Group for a free Estate Planning Consultation with Addison D. Larreau. Mountain View Law Group can be reached at (801) 393-5555 or at www.Utahslawfirm.com.