3 basic types of financial powers of attorney
A power of attorney allows a person you appoint — your “attorney-in-fact” or agent — to act in your place for financial purposes. It is a very important estate planning tool, but in fact there are several different types of powers of attorney that can be used for different purposes. Before executing this crucial document, it is important to understand what your options are. Below is a very brief explanation of each.
1.Limited. A limited power of attorney gives someone else the power to act in your stead for a very limited purpose. For example, a limited power of attorney could give someone the right to sign a deed to property for you on a day when you are out of town. It usually ends at a time specified in the document.
2. General. A general power of attorney is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself. For example, a general power of attorney may give your attorney-in-fact the right to sign documents for you, pay your bills, and conduct financial transactions on your behalf. You could use a general power of attorney if you were not incapacitated, but still needed someone to help you with financial matters. A general power of attorney ends on your death or incapacitation unless you rescind it before then.
3. Springing. A springing power of attorney can allow your attorney-in-fact to act for you if you become incapacitated, but it does not become effective until you are incapacitated. If you are using a springing power of attorney, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
Regardless of what type of power of attorney you use, it is important to think carefully about who will be your attorney-in-fact. Your attorney-in-fact will have a lot of control over your finances, and it is crucial that you trust him or her completely.
While North Carolina provides their own pre-approved forms, it is a good idea to have an attorney draft the form specifically for your needs and goals. The North Carolina provided forms are not made to fit everyone’s needs. There are many issues to consider and one size does not fit all.
If you have any concerns regarding a power of attorney you have created on your own and would like a review or would like one created, please call Sabrina Winters, Attorney at Law, PLLC at (704) 843-1446 or email us at firstname.lastname@example.org.