- A power of attorney is an estate planning tool that can be extremely powerful, depending on how the document is written. Power of attorney documents are frequently executed as a way to obtain assistance with financial matters. For example, people who travel frequently with busy schedules can give power of attorney to someone they trust to ensure bills are paid. Durable power of attorney documents stay "durable" even after the principal becomes incompetent. However, all power of attorney powers cease upon the death of the principal.
- Two types of power of attorneys are power of attorney for finances and power of attorney for health care. A power of attorney for finances allows the attorney-in-fact, also called an agent, to act on behalf of the principal in matters concerning finances. Thus, an agent -- in the broadest sense -- can pay bills, make investments, access all bank/financial accounts and buy and sell real property. If the agent is granted the broadest powers, he would be able to add signers to bank accounts.
- A limited power of attorney is tailored specifically to the grantor/principal's wishes. When a power of attorney is limited, it usually means the document only allows the agent to perform very particular tasks. For example, the grantor might wish for the agent to have the limited power to pay utility bills or make mortgage payments. Additionally, a limited power of attorney might only grant the agent the ability to deposit funds, rather than withdrawing funds.
- A general power of attorney gives the agent the ability to do anything the grantor could, or would, do. In a sense, a general power of attorney allows the agent to step into the shoes of the grantor/principal. As such, because the grantor could add signers to her bank account, the agent could also add signers under a general power of attorney. In short, when the power of attorney is general, the agent can conduct any financial transaction the grantor/principal can.
Overview
Finances
Limited Powers
General Powers
Source...