What Are the Types of Power of Attorney?
Power of attorney is a legal document that gives one person the power to represent or act on behalf of another person in business, private affairs, or any other legal matter. For instance, it can be used to allow one person to sign a contract for someone else, make financial transactions, make health care decisions, and so on. In fact, a power of attorney may be the most important of all the legal documents there are. Because of this, it’s not a decision to be taken lightly and should be discussed and researched first by all parties involved.
The person who is giving the power to another person is referred to as the principal, grantor, or donor. The person receiving the power is referred to as an agent or attorney-in-fact. The agent is able to make the power of attorney very broad or can limit it to just certain acts. There are four different types of power of attorney for you to choose from—special or limited power of attorney, general power of attorney, durable power of attorney, and springing durable power of attorney.
1. Special or Limited Power of Attorney
If you don’t want to give someone the ability to act on behalf of all of your rights, a special or limited power of attorney is likely what you want to choose. It gives the agent the power to act for you in only a very specific, limited purpose. There will be a specified time in the document when the power of attorney privileges end.
Common uses of a special or limited power of attorney include granting the agent the ability to sell a home or other real estate, sign a deed on behalf of the principal, or cash checks payable in the principal’s name.
2. General Power of Attorney
As the name suggests, this is the broadest level of power of attorney, and it’s quite comprehensive. With a general power of attorney in Oregon, the agent can act entirely on behalf of the principal. Any rights the grantor has are now shared with the agent. This means that the agent can manage the principal’s personal finances, including opening accounts and signing for them. The agent is also able to file lawsuits, make financial investments, manage the business, apply for benefits, collect debts, cash checks, and purchase or sell things all on behalf of the principal.
To revoke a general power of attorney arrangement, the principal needs to legally take it away, become incapacitated, or pass away.
3. Durable Power of Attorney
Whereas a general power of attorney is revoked when a principal becomes incapacitated, a durable power of attorney endures. This means that you should assign someone as a durable power of attorney in Oregon when you want to give them authority only if you’re not able to act on behalf of yourself or if you want to give them an immediate authority that will continue after you become incapacitated. This form of power of attorney can be limited or general in scope. A durable power of attorney in Oregon will remain in place until the principal’s passing or if they revoked it before becoming incapacitated.
A common reason people choose a durable power of attorney in Oregon is if they have been diagnosed with a disease such as Alzheimer’s. By choosing a durable power of attorney, you’re making sure that there is someone who can begin to act on your behalf or continue to act on your behalf when the disease progresses to a level where you’re no longer able to act on your own.
If you don’t assign a durable power of attorney and become incapacitated, a court will have to appoint a guardian or conservator for you, which is why it’s good to assign a durable power of attorney sooner rather than later.
4. Springing Durable Power of Attorney
As you may be able to tell from the name, this form of power of attorney is similar to a durable power of attorney, but it only begins once a specified event has happened where the principal has become incapacitated. Because of this, it’s very important that if you choose this type of power of attorney, you are extremely careful in the document to determine the standard for what would trigger the power of attorney to become effective. Both the principal and the agent need to understand what triggers this springing durable power of attorney to begin and make sure that it’s crystal clear in the document so there won’t be any misinterpretation.
Not every state in the US has this type of power of attorney, but there is springing durable power of attorney in Oregon if this is an appropriate option for your situation.
Some Considerations Before Sign the Paperwork
Becoming involved in a power of attorney privilege is an important decision and responsibility for both parties. If you’re the principal, you’re allowing someone else to act on behalf of you. Therefore, it’s crucial to understand the different types of power of attorney first to ensure you’re choosing the type that’s correct for you and will benefit you the most. It’s also important that you assign a power of attorney prior to becoming incapacitated.
If you’re considering naming a power of attorney in Oregon, at Warren Allen LLP, we’re here for you. We’ve been serving Portland and the Pacific Northwest since 1971 and have a thorough understanding of power of attorney. Please feel free to reach out to us. We’re happy to discuss the topic further with you and hear about your needs. We can then help to assess your situation and provide you with a recommendation as to which power of attorney we would recommend for you. We understand that this is a big decision to make, and we’re here to guide you through the process and make it a bit easier.