The literal definition of an attorney is: an appointed person who acts in someone else’s stead to make personal and financial decisions. To understand it better, an incapacitated individual who is referred to as the ‘principal’ appoints a person, who has the power of attorney and can take decisions on the principal’s behalf.
The principal decides the amount of power that he wants to vest with his attorney and he/she can be trusted with making both personal and financial decisions for the principal.
There are different types of power of attorney. Let’s understand them one by one.
#1. General Power Of Attorney
As the name suggests, a general power of attorney gives a wide range of powers to the attorney-in-fact to act on the principal’s behalf. Some of the powers that a general power of attorney has, include making financial decisions, purchasing life insurance for the principal, and seeing over other business related activities.
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#2. Special Power Of Attorney
In this type of power of attorney, a principal can decide the special powers that he wants to give his attorney-in-fact, i.e., he can decide what matters will be handled by the attorney-in-fact and what not.
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#3. Durable Power Of Attorney
Say, the principal meets with an unfortunate accident that renders him mentally incompetent or causes some other severe injury, what happens to the power of attorney then? In such a case, the principal signs a durable power of attorney that safeguards the principal against any problems. Like the name itself, this power of attorney remains durable and intact irrespective of the health and mental condition of the principal.
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#4. Health Care Power Of Attorney
As evident by the name itself, if the principal signs a health care power of attorney, then his agent can take all health related decisions on his behalf. These decisions might include the type of health insurance to buy and the amount of money to be spent during a medical condition.
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When you sign a power of attorney, you literally give a part of your life in someone else’s hands. So, always make sure that your attorney-in-fact is someone you can blindly trust. This is the reason why people often choose their close relatives as their attorney-in-fact. The bottom line to all of this is that choose a person to be your agent only when you can blindly trust him/her.
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