When and How to Use Power of Attorney
Power of Attorney allows someone else to make decisions for the grantor of the power in the event that he or she is unable to make these decisions by him or herself. These decisions cover finances, healthcare, investments and/or business transactions. Power of Attorney, or POA, allows the appointed agent to legally act on behalf of the grantor.
What Is Power of Attorney?
Circumstances may arise that warrant an agent acting on your behalf. These agreements are recognized by the legal system and allow decisions to be made either in your absence or if you become incapacitated. Common uses of the Power of Attorney include:
- Financial: This allows someone to make financial decisions, such as transferring or withdrawing money from your accounts.
- Health: This allows someone to make important medical choices in the event that you are incapable of making the decision yourself.
- Parental: This “delegation of parental powers” allows you to temporarily transfer parental rights to another individual for a short period of time.
Choose your agent carefully, and discuss your wishes if various circumstances arise. Most people typically choose a reliable, trusted person, such as a family member or life-long friend.
Be sure to use the correct forms and to check the laws in your state regarding different POA requirements.
Full Power: Full Power of Attorney allows an agent to act on behalf of the grantor with full control over decisions. This includes complete access to bank accounts and records, medical documents and more. This type of POA is typically used when the grantor is mentally or physically deteriorating and will be incapable of making his or her own decisions. The agent is expected to act in the best interests of the grantor.
Limited Power: Limited Power of Attorney is similar but allows the grantor to specify exactly when and what they hand over control to. These are typically used in more limited cases, such as to prepare for a temporary absence (like leaving the country) or to obtain permission to patent intellectual property on behalf of an employee.
Common Business Uses
Many employers provide standardized Power of Attorney forms to their employees. These forms could be required in various circumstances in which necessary actions would need to be taken by an agent, whether it is in the case of an employee’s absence, illness or death.
Some situations where Power of Attorney would be necessary include:
- Standard Powers of Attorney will ensure that financial and business matters will be carried out if you or your employee becomes incapacitated in some way. In the chance of an illness or accident that would render the party unable to make decisions, or in the chance of death, POA would allow the agent to withdraw employment on behalf of the employee and to make decisions regarding finances and employee benefits.
- If you or an employee is leaving the country and/or will be unreachable for a period of time, POA would allow the agent to endorse payments or sign any necessary documents for the business (contracts, deeds, etc.) in your absence.
- If you share a joint tenancy (ownership of a business property) with someone, a designated Power of Attorney will allow you to endorse checks in their absence. It will also give you the ability to sell or refinance the property if they become incapacitated.
- If you operate in a field of work that requires a lot of innovation and developments, you can have an employee sign a POA that gives permission to patent any inventions that occur as a result of company time and resources during employment. This gives you permission to approve of any necessary patents or copyrights on intellectual property.
For assistance on choosing a Power of Attorney or reviewing your POA documents, consult your lawyer. You should also consult your attorney to help you determine the right type of Power of Attorney that will be necessary under different circumstances. They can help you make the right decision and give advice on what should be included.