If you’ve begun the process of estate planning, you’re probably hearing a lot of new terms, including Power of Attorney. In the midst of all the legal terms, it can be confusing and difficult to understand all the information you’re receiving. This is different from the Health Care Power of Attorney, even if you want to name the same person(s). Instead of feeling lost amidst all the definitions and documents, here’s a look at what you need to know about a Power of Attorney.
A Power of Attorney is a legal document where you assign another person to represent you in some or all of your legal and financial matters. With a Power of Attorney, their signature is essentially the same as yours and binds you to any commitments that a person makes on your behalf. There is also a Limited Power of Attorney, that allows you to give this power for only a specific purpose.
The most common reason is in case you become incapacitated – a terrible accident, or declining mental health, such as Alzheimers or dementia. Perhaps you don’t have all the time necessary to take care of all of your legal and financial matters, so assigning a Power of Attorney helps you complete all your necessary commitments, such as getting your bills paid and notifying service providers as appropriate. You might not be able to travel or even leave your home, so in this instance, another person needs to attend meetings or go to the bank on your behalf.
When a person has the Power of Attorney, they are basically acting as you, and you’re bound by any terms and commitments they sign on your behalf. For this reason, you should only provide a Power of Attorney to someone you know will act in your best interests and will follow your wishes implicitly.
A typical Power of Attorney in North Carolina is effective in one of three circumstances, depending on what you choose: your first option is “immediately” – that person has the authority to act now, but if you become incapacitated then their authority is cut off. The second option is your attorney – in fact, (the person you named) initially has no authority to act, but IF/when you become incapacitated, then (and only then) they have the authority to act. This is the most common choice for most clients seeking to execute a power of attorney. Lastly, a power of attorney can grant authority both immediately AND if/when you become incapacitated. Frequently you will hear somebody say “Durable” Power of Attorney, and the “durable” part comes into effect if the authority continues after if/when you become incapacitated.
One other option for a power of attorney is a “temporary” power of attorney. These are used all the time – for example, if you purchase a house, you give the closing attorney and the bank a limited power of attorney to act on your behalf to close the transaction. Or you might give grandma a limited power of attorney to deal with matters related to your children while you travel for work. These typically are issued for only a single transaction or a specific date and time window.
There are times when you need to assign Power of Attorney to someone else because you can’t attend to your financial and legal dealings in person or may not be able to personally attend to your affairs due to work, time or other obligations. At Apple Payne Law, we understand the importance of this step as a part of estate planning and in everyday life. If you have any questions, feel free to contact us today to learn how we can help.