A power of attorney is a document that allows the principal, to provide another person, known as an agent or attorney-in-fact, with authority to make financial, legal, healthcare or other decisions on the principal’s behalf. The power of attorney can apply generally to all actions taken on a principal’s behalf, or it can specify particular transactions that may be performed by the attorney-in-fact.
A “springing” financial power of attorney and healthcare power of attorney (incorporated into an Advance Healthcare Directive) are the two types of power of attorneys that are typically included in a basic estate plan. The term “springing” is used to describe the fact that the appointed agent is only authorized to take action upon the occurrence of a specified event, commonly the disability or incapacity of the principal. This differs from other durable power of attorney documents which permit the agent to act at any time. While we provide both types of documents, most clients do not want their agent to have authority to act until the client is no longer capable of acting on his or her own behalf. For this reason, clients generally prefer a “springing” power of attorney.
The financial designations in the form financial power of attorney limit the scope of the agents actions to those financial transactions listed in the power of attorney. This designation differs from a general power of attorney which permits an agent to act on the principal’s behalf as to all matters. Clients often wish to designate one person to manage their finances and another to make healthcare decisions. Providing two separate power of attorney documents accomplishes this objective.