4 Authorities Granted by Power of Attorney
Typically, people don’t like to think too much about being unable to make their own decisions. But if you suffer a severe illness of injury, it is very possible that you will be in this position. As with all sorts of estate and legacy planning, it is important to make your wishes known. Giving power of attorney to another person (or persons) takes this concept a step further, as it allows them to act on your behalf in a legal and binding manner. Here are some of the typical applications that a power of attorney can be used for.
1. Applying for benefits
There are many ways to designate when a power of attorney takes effect. Generally, the two most common times are immediately upon execution of power of attorney documents, or when the principal can no longer make their own decisions. The principal is the person granting power of attorney, and the person receiving it is referred to as the agent. The principal may want the power of attorney to take effect immediately if they receive a negative diagnosis. If they specify that it takes effect when they are no longer able to make their own decisions, the agent may need to have physicians provide proof of this to back it up.
It is critical to understand that the principal must be of sound mind when granting power of attorney. If they are mentally incapacitated, power of attorney cannot be granted. It is, therefore, a foreword-thinking strategy by design. As such, an agent can work on the principal’s behalf to apply for public benefits such as Medicare or Medicaid.
2. Managing your business
If you, as the principal, are a business owner, you can grant power of attorney to your agent to run and make decisions for your business, including the buying and selling of assets.
3. Managing your finances
Power of attorney can also grant the agent the authority to manage the principal’s finances. This is a broad power that includes writing and cashing checks, collecting debts, and investing the principal’s money as they see fit, generally without oversight.
4. Pursuing legal action
An agent with power of attorney may also sue on your behalf, should the need arise.
It is important to note that regulations for powers of attorney vary depending on situations and states. It is always recommended that both parties review power of attorney documents with a lawyer before entering into the agreement, so they understand the responsibilities, the terms under which the power is granted, and the circumstances under which it can be revoked.