A power of attorney (POA) is an important document to consider during the estate planning process. These legal documents allow you to promote an individual, called an agent, to represent another person, called a principal. Before you execute a POA, ensure you understand the differences in the main types of power of attorney.
Types of Power of Attorney Defined
A power of attorney can be used to manage personal and financial matters. By and large, POAs are used to appoint legal authority to an agent when the principal is incapacitated, but they can also come into play in matters of convenience. Powers of attorney come in different types, which define the abilities and scope of the agent’s decision-making power.
General Power of Attorney
A general power of attorney allows you, as the principal, to appoint an agent to manage all of your affairs. In Ohio, a general POA covers your financial matters. This person can pay bills, sign documents, and make transactions on behalf of the principal. Given that this type of power of attorney affords the agent with a lot of control over your financial decisions, you may want only to use this POA for a limited amount of time.
Limited Power of Attorney
A limited POA, also known as a special power of attorney, is often used for convenience. These types of POA typically have a limited scope and can be revoked by the principal at any time. Limited POA’s in Ohio are usually executed to complete a specific business transaction or real estate purchase.
Durable Power of Attorney
Durable POA’s typically go into effect as soon as they are signed. This means that, if you’re incapacitated, the agent can continue to act on your behalf. This type of power of attorney ends upon the death of the principal.
Non-Durable Power of Attorney
Just like a durable POA, this legal document usually goes into effect at signing. However, if you become incapacitated, incompetent, or pass away, the agent loses their ability to make decisions.
Springing Power of Attorney
Springing, or conditional, POAs only take effect when a predetermined event or circumstance is met. Usually, they start when the principal is incapacitated. With this type of POA, it’s vital to ensure there are clear guidelines for the power of attorney document to go into effect.
Primary Purposes of Powers of Attorney
POAs are typically designated for either financial or medical decisions. Financial powers of attorney in Ohio are expected to act in the best interest of the principal. The exact scope of their abilities depends on how the POA is set up. However, unless the agent is granted special permissions, they are typically unable to make changes to trusts and beneficiary designations.
A medical or health care power of attorney allows the agent to make medical decisions for the principal. Typically, medical POAs are conditional, and start at the time of incapacitation. Although these agents can make health care decisions for the principal, they cannot make a decision that goes against a living will. In Ohio, an agent in a health care POA is called an attorney-in-fact.
Whether you’re considering appointing an agent to manage your financial transactions or medical care decisions, you’ll want to be sure that it satisfies the needs of you and your loved ones. Depending on your circumstances, your estate plan may require multiple POA documents. At Solomon, Steiner & Peck, Ltd., our experienced legal team is here to help you make sense of what can be a complicated and challenging process. Contact us today to schedule a consultation and learn more about our estate planning services.