Yahoo Finance’s recent article entitled “What is Special Power of Attorney?” explains that with a general power of attorney (POA), you can designate a person to make decisions when you are unable, due to illness or incapacitation. Your agent (the person you select) may be able to file your tax returns, access bank records, or sign financial contracts in your name.
A special power of attorney only applies to specific circumstances. This is also called limited power of attorney. An agent named as special or limited power of attorney can only act in situations included in your power of attorney document. A special power of attorney can be for one specific instance or multiple uses. However, it depends on the conditions under which your agent is authorized to act. There are four ways you can set up special power of attorney:
- Durable: Stays in force for your lifetime or until you decide to cancel it.
- Limited: Starts and ends on a specific date or ends once a specified event has happened.
- General: Starts immediately and ends when you become incapacitated.
- Contingent/springing: Starts when you become incapacitated and are unable to make decisions on your own.
You can have multiple powers of attorney, depending on your situation. The main reason to use a special power of attorney is to make certain your finances and other legal affairs continue to be managed in the way you want, when you’re not able to do things for yourself.
Remember that a power of attorney only applies during your lifetime. The POA ends when you pass away. Your assets would then be managed pursuant to the terms of your will or trust, if you have either. If a person dies without a will, her assets are distributed according to the probate laws of the state.
Creating a power of attorney looks easy enough. However, there are specific rules you must follow. An experienced elder law or estate planning attorney can guide you on the specifics and answer any questions you might have. Typically, creating special power of attorney involves the following:
- Naming a person to act as your agent
- Detailing the specific terms under which a power of attorney will take effect
- Determining which authority your agent will have
- Designating a successor agent, if necessary, and
- Choosing an end date for the power of attorney to terminate
A power of attorney is just one of the documents you may need for your estate plan. You should also ask your estate planning attorney about a last will and testament and a living trust to help you manage assets, according to your wishes after you pass away. Another critical document is an advance health care directive which states the kind of care you should receive in any end of life situation. Ask an experienced estate planning attorney about the documents you need.