Power of Attorney: This document is commonly known as a financial power of attorney and gives one person (the agent) authority to act on behalf of another person (the principal). Full power or limited power can be granted in the document.
Attorney-in-fact: A person who is given authority by a power of attorney; sometimes called an agent. This person does not have to be a lawyer. It could be your spouse, an adult child, or close friend.
Durable Power of Attorney: While similar to a general power of attorney, a durable power of attorney continues after a person becomes disabled, incapacitated, or incompetent—a time when the power is most needed. It permits the person you appoint to handle your financial affairs and can be flexible by allowing the agent as many powers or as few powers as you wish. In most states, this power must be signed and notarized to indicate that it is “durable.” (Note: Many states require that a power of attorney contain specific words to create a durable power of attorney. Consult an attorney to see what language must be included to create a durable power of attorney in your state.)
Springing Durable Power of Attorney: The power-of-attorney document can specify when the document goes into effect. If it specifies that a doctor must certify that you have become incapacitated in order for it to take effect, it is called a “springing” durable power of attorney and allows you to remain in control of your financial affairs until you become incapacitated. Note that it cannot take effect unless it is “durable.” (Caution: Today’s medical privacy laws have made it difficult or impossible for doctors to sign statements that patients are mentally or physically incapable of managing their personal affairs. Unless the condition that “springs” the power of attorney into effect is specified in the document, it will be defined by state law.)
- a. Common Types of Powers of Attorney
- b. Duties of and Selection Criteria for the Attorney-in-Fact
Prepare Your Estate Plan belongs to a series called Legally Secure Your Financial Future. The series also includes information to help you organize important household papers and to communicate your health-care wishes.