What Does Power of Attorney Mean?

By Brandi Brown , last updated June 29, 2011

Power of attorney grants someone else the right to act and make decisions on your behalf in certain circumstances. The breadth of this person’s decision-making capabilities varies based on your needs and the specific agreement you set forth. For many people, setting up a power of attorney is part of the estate-planning process, but even people without children or any assets should consider setting up a power of attorney to avoid any fighting or confusion in the case of an emergency.

A general power of attorney grants one person the right to act on your behalf. This person may handle routine transactions, such as making withdrawals from your banking account and paying your bills, to selling your property and filing your income taxes. People have a general power of attorney for two reasons. First, some people appoint an agent, the person granted legal rights and responsibilities in the power of attorney document, when they plan to travel out of the country for an extended period of time. This travel may be personal or for business. For example, military personnel must file a power of attorney before deployment to a combat zone.

Many people also have a general power of attorney that goes into effect only if they are incapacitated for some reason. This incapacitation may be because of a mental or physical illness that renders the person unable to make decisions, or it may be from a car accident or natural disaster that leaves the person hurt or missing. In these cases, the power of attorney may be controversial if some people argue that taking over the person’s affairs isn’t necessary.

The special power of attorney works in the same way as the general power of attorney, but the document has provisions permitting someone to make only limited decisions. If you need to move to Alaska but have a home in Florida, for example, you may grant your father the special power of attorney to sell that property. You retain the rights to make all other legal and financial decisions, and your father’s rights extend no farther than the specific power you granted him.

Other types of power of attorney exist as well. The medical or healthcare power of attorney is another document that grants someone specific powers to make medical decisions for someone who cannot do so for himself or herself. The person, usually called a medical proxy, granted this right will decide how to proceed with regard to medications, surgeries, and even end-of-life decisions. A separate document, called a living will, outlines a person’s wishes with regard to life-sustaining measures, but the medical power of attorney can make that decision. Otherwise laws in the state where you are determine who will make these decisions.

The final type of power of attorney is the durable power of attorney, a document that works as an extension to the general power of attorney. The medical power of attorney is a temporary document intended for use during times of crisis, but with the durable power of attorney, this person can remain the point person for all financial, medical, and legal decisions going forward.

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