Many people do not realize that there are several different types of Power of Attorney. Each serves a specific purpose and has its own set of rules as to when it will come into effect, as well as when it will cease. Below, we discuss the four most common types.
First, a durable power of attorney deems that if a principal becomes incapacitated or determined unfit to make his or her own decisions, then the powers remain in place and decisions can continue to be made by the designated agent. This type of power of attorney is irrevocable.
The second type is a durable power of attorney with springing powers. This type is the exact same as the aforementioned durable power of attorney. However, it does not become effective or "spring" into place, until a catastrophic event, which leaves the principal incapacitated. For example, if someone were to be involved in a car accident that left them in a coma and unable to make decisions, then the designated agent would be able to make those decisions for them.
Third, a medical power of attorney, which is also sometimes referred to by medical providers as an advanced directive, gives an agent the power to make medical decisions on a person's behalf.
The final type is a financial power of attorney. This can give a designated person the legal right to make financial decisions and utilize bank accounts.
Consulting with an estate planning attorney can offer guidance in which of these would be the best fit for your particular situation. Every person's situation is different, and it is vital to understand what documents are best in your personal situation.