Are you concerned about incapacity planning and wondering what type of power of attorney you need? In this article, our Charlotte estate planning attorney will explain what a general power of attorney does. For a variety reasons, we all have times when we need someone else to manage some of our affairs – and not just when we’re incapacitated due to illness or injury.
The basic need for a power of attorney
Many people run into situations when they are at least temporarily unable to handle certain decisions or actions. For example, if you are out of the country and still want to ensure that business interests and other concerns are looked after, you’ll need someone to do that for you. The problem is that you can’t always just write a note giving someone permission to act on your behalf.
How Does a General Power of Attorney Work?
With any power of attorney, you create a document that names another person to serve as your attorney-in-fact. The power of attorney document empowers that person to act in your place for decisions involving financial concerns, medical needs, and other purposes. As a rule, there are four different types of power of attorney that you should be familiar with: a limited power of attorney, a general power of attorney, a springing power of attorney, and an immediate durable power of attorney.
Limited Power of Attorney
The limited option provides significant restrictions on the powers you give the attorney-in-fact. Often, these documents are used when you need a small number of things done – like signing a sales form or other types of documents when you’re not available. There is typically a sunset provision that specifies when the power ends.
General Power of Attorney
The general power is broader and typically gives the attorney-in-fact the authority to do almost anything that you can do in your own name. He or she can sign documents, pay bills, cash checks, and buy or sell in your name. This power can be limited by specific provisions in the empowering document and always expires when you die.
The limited and general powers of attorney determine what the attorney-in-fact can do. The next two, springing and immediate powers of attorney determine when the attorney-in-fact can do them.
Springing Power of Attorney
This power gives your attorney-in-fact authority to act in your place only during periods of incapacitation. As a result, it can be used to help you avoid the need for a conservator if you lose the ability to manage your own affairs. But it only comes into effect when you are declared incapacitated (often by one or more doctors) and then terminates at your death.
Immediate Durable Power of Attorney
Like the springing power of attorney, this power provides broad authority to an attorney-in-fact to act on your behalf. It can also be either limited in scope or general. Unlike the springing power, however, it goes into effect immediately when it is created and does not require anyone to determine you are incapacitated. Unless you rescind its provisions, the durable power remains in effect until you die.
What Your Power of Attorney Can Do for You
Sometimes, the best way to determine what type of power of attorney you need is to ask what types of powers you might need your attorney-in-fact to exercise. With your general power of attorney, your designated agent could buy and sell real estate on your behalf, as well as manage existing properties for you. The attorney-in-fact can manage your financial accounts, write checks, and maintain your safety deposit boxes.
An agent can make life insurance purchases or revisions to policies for you, make decisions with regard to your stocks and bonds, manage your government benefits, prepare and file your tax returns, and enter into and sign contracts on your behalf. An agent can also settle legal claims on your behalf, handle your business affairs – including issuing checks, paying employees, purchasing stock, transferring assets to your revocable trust, and collecting money from your debtors.
What You Cannot Do with a General Power of Attorney
Many people wonder about the types of limitations that are imposed by a power of attorney. While the powers granted under a general power of attorney can be quite broad, there are certain things that your attorney-in-fact can never do with that power. For instance, your agent cannot vote for you, alter or amend your will, handle matters related to your divorce or marriage, or exercise any power you specifically precluded in your power of attorney document.
Do you need a general or limited power of attorney?
If you decide that you need a general power of attorney to protect your interests, it is important to determine whether you need it just for a limited period of time or want it to serve as protection in case of incapacity too. That decision will be largely dependent upon your circumstances and your broader estate planning goals. To make those determinations, consult with our experienced Charlotte estate planning attorney.
Join us for a FREE seminar today! If you have questions regarding powers of attorney or any other estate planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).