Although every estate plan is unique to the individual creating the plan there are some strategies and tools that are commonly used when creating an estate plan. A “ power of attorney ” is one of those tools. When used properly a power of attorney, or POA, can be a useful addition to any estate plan. Before you execute a POA though it is imperative that you have a thorough understanding of what a power of attorney is, the authority is can convey, and the different types of POAs that can be created.
At its most basic, a power of attorney is a legal agreement wherein you (the “Principal”) are able to grant authority or power to another person (the “Agent”) to act on your behalf in legal matters. POAs fall into two broad categories – general and limited. A general POA will convey almost unlimited power to your Agent. With a general power of attorney your Agent can typically do things such as sell property of yours, withdraw funds from a financial account owned by you, or even enter into a contract in your name. Because of the degree of power you confer with a general POA you should be very careful when choosing an Agent for a general POA.
A limited POA, also referred to as a “special” POA, only gives your Agent specific authority to act on your behalf. You might, for example, give an Agent POA to take your place at the closing for the sale of your house because you will be out of the country. The Agent’s authority only extends to that act and will expire after used.
Traditionally, a POA automatically terminated upon the death or incapacity of the Principal. Often, however, upon your incapacity is exactly when you want a POA to work. To resolve this common dilemma, the “durable” power of attorney was created. Anytime a POA is “durable”, therefore, it means that the power conferred in the POA will survive the incapacity of the Principal.
Finally, a “springing” power of attorney is one that does not become effective until a specific event occurs. For example, upon your incapacity a springing POA might “spring” into effect.
If you have additional questions or concerns about creating or executing a power of attorney, or about estate planning in general, contact the experienced South Carolina estate planning attorneys at Kuhn & Kuhn Law Firm by calling 843-577-3700 to schedule your appointment.
- Preparing for Coronavirus - March 10, 2020
- Incapacity Planning - December 20, 2018
- Special Accounts for People with Special Needs - December 17, 2018
