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If you’re a caregiver, you may have heard or seen the term “power of attorney,” especially when trying to talk to your loved one’s doctors or manage their health insurance. In some cases, it may be necessary to get some type of power of attorney in order to accomplish everything you need to do as a caregiver.
Power of attorney is an estate planning document that allows a person to grant important decision-making powers to somebody else. The person who is given the decision-making authority is often called the attorney-of-fact or the agent. The person who is giving authority to the agent is often called the principal.
While laws vary from state to state, a power of attorney agreement is usually made in order to allow people to manage contracts, real estate, stocks, bonds, and to make medical decisions when a loved one is physically unable to do so (like when they are out of the country) or no longer mentally able to make those kinds of decisions through illness.
There are 4 basics types of power of attorney. Each one grants the agent a different range of items they can manage on behalf of a loved one and a different time frame in which those powers are in effect.
Limited power of attorney allows you to make decisions on behalf of somebody else in a specific circumstance, usually only for a limited amount of time. For example, you might be given limited power of attorney in order to sell a piece of property for a relative while they’re out of town. You may even grant it to a trusted financial advisor to make investments on your behalf. However, limited power of attorney only gives you authority during the predetermined time frame and ONLY in regard to the specific activity outlined in the agreement.
General power of attorney enables you to do a wide variety of things like: pay bills, sign checks, sell real estate, talk to doctors, and more – all on behalf of somebody else. However, general power of attorney ends when the principal dies or becomes incapacitated.
Durable power of attorney can be either general or limited in terms of what you’re given decision-making authority over. Unlike limited or general power of attorney, durable power of attorney stays in effect even after the principal is incapacitated. Without this, you won’t be able to represent your loved one unless a court appoints you as a conservator or guardian. Durable power of attorney remains in effect until the principal’s death.
Springing power attorney follows all the same rules as a durable power of attorney – it grants you the power to make a wide variety of decisions over financial, legal, and medical matters. However, a springing power of attorney does not go into effect UNTIL the principal becomes incapacitated. This basically lets the principal keep control of their affairs for as long as they are able but ensures that somebody responsible is in charge should the worst happen. When creating this type of agreement, it’s important to determine what “incapacitated” means in the document before signing.
If you need to learn more about a loved one’s Medicare options and whether or not you’ll need power of attorney in order move forward with your plans, our licensed Medicare advisors can help.