A Power of Attorney may fall into several different categories. Each gives a set of rights with respective specifications and restrictions. It can be overwhelming as well as confusing without professional legal advice. It is critical for both the Principal and the Attorney in Fact to fully comprehend the details of this contract prior to signing anything.
Power of Attorney Overview
A Power of Attorney is a legally binding agreement an Attorney in Fact and the Principal. The Attorney in Fact is the acting agent. The Principal is the individual granting decision-making rights. Most commonly this agreement is a written document. However, verbal equivalents are not unheard of. This contract can be special, general or limited.
A General Power of Attorney designates an individual to make financial decisions in granter’s stead. It is best to outline exactly which rights are to be permitted. These responsibilities can include access to bank accounts and the ability to pay expenses. The agreement may prevent the Attorney in Fact from using those assets for the purpose of paying him or herself.
Examples of Financial Decision-Making Rights
- The Attorney in Fact may have the right to file taxes on the Principal’s behalf.
- The acting agent may be able to make business-based or real estate purchases.
- Borrowing money on behalf of the Principal is another right often granted.
- The agreement can allow the acting agent to make monetary investments.
The Principal can also limit the Power of Attorney by specifying any number of restrictions within the document. This may be called a Specific or Limited Power of Attorney. A Special Power of Attorney states precise rights and responsibilities and these types of agreements are voided if the Principal becomes unable to carry out important decisions.
A Durable Power of Attorney, on the other hand, goes into effect when the Principal becomes incapacitated. Its purpose is to protect his or her medically related wishes. It usually allows the acting agent to make both financial and medical decisions on the Principal’s behalf.
Durable Power of Attorney
Within the details of a Durable Power of Attorney, the person granting the medical decision-making rights is still known as the Principal. The individual gaining those rights is referred to as the Proxy or Health Care Agent. This type of agreement must be drawn up and signed prior to the debilitating event. Written medical documentation detailing the condition which has caused this debilitation must be submitted to the courts.
The Health Care Agent is given full transparency when speaking with medical professionals about the Principal’s illness. He or she is responsible for making decisions concerning hospitals, rehabilitation, therapy and surgery. This is in addition to the financial decision-making rights and everything must be clearly outlined in the wording.
Michigan Law mandates that the Power of Attorney is written and voluntarily signed. The Principal granting those rights must be of sound mind when signing the agreement. It is essential to consult a legal professional in these matters to protect both the Principal and the Proxy. Brian F. Abramson has 23 years of legal experience. Contact his office for consultation today.