Just about everyone understands what a Last Will and Testament is and the purpose it serves. That legal document is the foundation of many people’s estate plans, but it is also not the last word on estate planning for plenty of people. Another estate planning document that might be important for you, your family, and your property is a power of attorney. There are several types of power of attorney; we’ll go over some of these common types and more in this blog.
Power of Attorney Defined
The basic definition of power of attorney is a legal document conferring certain powers and authority to an agent (sometimes called “attorney-in-fact”) from a principal. Most power-of-attorney contracts end when the principal becomes incapacitated (unless it is recognized as durable). Other times, a power of attorney only goes into effect when the principal becomes incapacitated (as is the case with springs POAs). Some POA types end when the principal revokes the document or the agent is no longer able to serve in his or her capacity.
Some common power-of-attorney types used in Texas include:
- General Power of Attorney — This type gives your agent the power to engage in a wide variety of financial transactions on your behalf. To give a few examples, your agent might be given the authority to buy or sell real estate, represent you in a lawsuit, or maintain financial accounts (including retirement plans). Unless you choose to make your general power of attorney durable, it will end when you become incapacitated.
- Limited Power of Attorney — While a general POA can confer broad powers to your agent, a limited power of attorney only gives your agent the power to act on your behalf in certain situations (that you specify in the document). Let’s say you are getting into real estate investing but will be out of the country when you need to sign for a new property. You can create a limited power of attorney to give your trusted friend the authority to sign for you in this one instance.
- Medical Power of Attorney — If you’re no longer able to communicate with your medical team, how will your doctor know which life-sustaining measures you want administered? A proactive solution to this potential issue is naming your spouse, son, daughter, or other close family member to communicate your wishes for you if you become incapacitated. The matters covered in a medical POA are incredibly sensitive and personal; it’s crucial to make sure your agent explicitly understands your wishes. To make you more comfortable with a medical POA, you may specify matters that your agent may not make decisions about.
Albright & Lumpkin is Here to Answer Your Questions
The bottom line is that estate plans, while perhaps a little discomforting to ponder and create, are incredibly useful in making sure your loved ones and property is taken care of when you leave this Earth. It’s possible that your estate plan needs a power of attorney (or multiple); it’s equally possible that you do not need these documents. Our legal team is always available to answer any legal questions you might have. We strongly recommend speaking with a quality and experienced attorney soon!
Albright & Lumpkin, PC
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