If you’ve begun planning for your future—or at least thought about it—you’ve likely come across terms like “power of attorney,” “advance directive” or “long-term care insurance.” Because planning for your future involves creating and signing many legal documents, deciphering what you should and should not include or sign can seem overwhelming.
In this post, we’ll take a look at what you need to know about power of attorney and shine the light on some common myths about this document.
What is a Power of Attorney?
Before we look at common power of attorney myths, let’s first examine what a power of attorney actually is. Power of attorney is a legal document that gives you the authority to appoint a person or organization to manage your affairs on your behalf. This could be because you’re ill; about to have surgery and temporarily unable to make decisions; leaving the country for an extended period of time; or single and have assets to protect.
Types of Power Attorney
There are four power of attorney types:
- General power of attorney: This document gives a person or organization the ability to make the following decisions of your behalf: handle financial and business transactions, settle claims, operate business interests, employ professional help or make gifts. This is a good option if you’ll be out of the country or are ill or otherwise incapacitated.
- Special power of attorney: This document allows you to specify what actions a power of attorney may perform on your behalf, like handling business matters or managing transactions.
- Medical power of attorney: This document gives your appointed person the ability to make healthcare decisions on your behalf if you are unable.
- Durable power of attorney: This is a document that helps keep your current power of attorney specifications in tact in the event you become mentally incompetent.
Three Common Power of Attorney Myths
Signing power of attorney documents means you can’t make your own decisions: You can make a power of attorney document as broad or narrow as you like. As long as you are still mentally competent, you and your selected agent can make decisions on your behalf. You only lose the ability to make decisions for yourself once you are declared mentally incompetent—usually by the physician of your choosing.
You can only use an attorney to act as your agent: There is no requirement for the agent you choose to be an attorney or to have legal training. You may choose your attorney to act as your agent if you wish, but you also may choose a family member or friend.
You can create and sign power of attorney documents online: While there are plenty of power of attorney documents available online, it’s not a good idea to use them as your power of attorney document. That’s because your document should include the specifics of your unique situation. Not only that, these online templates could:
- Not be current.
- Not cover the legal requirements of your state.
- Be too ambiguous.
