Estate planning is important for everyone, regardless of your financial situation, family status, or any other issue. Exerting control of how your final affairs will be handled is a benefit of estate planning. However, the goal of estate planning is to protect yourself, your property, and your heirs by utilizing estate documents and tools. One of the tools that our Texas estate planning lawyer often suggests to clients is a Power of Attorney.
What is a Power of Attorney?
A Power of Attorney (POA) is a legal document that grants various powers to act on your behalf to another person (an agent or attorney-in-fact). The principal (you) sets the terms and conditions under which your agent can act. Some POAs give broad powers while other POAs restrict or limit the agent’s powers to act on your behalf. Because a POA can give another person the ability to make financial and health care decision on your behalf, it is important to work closely with a Texas estate planning lawyer when choosing and executing a Power of Attorney.
What are Some of the Common Types of Powers of Attorneys Used in Texas?
As principal, you can grant your agent a variety of powers to act on your behalf. The scope of the POA depends on the intended use. Below are several types of POAs that you may want to consider using to accomplish one or more estate planning goals:
- General Power of Attorney: A General POA typically gives the agent the power to transact business in your name. Unless you include specific restrictions, a General POA allows your agent to perform financial transactions in your name that you are permitted to do yourself. For example, a General POA allows the agent to buy and sell real estate and personal property; open and close financial accounts; file and settle lawsuits; enter and end contracts; enter leases and collect rents; manage investments; withdraw funds from accounts; and, invest money. Therefore, granting a General POA without restrictions gives another person unlimited power over your financial matters, so you need to consult with a Texas estate planning lawyer to discuss the pros and cons of a General POA before executing the document.
- Durable General Power of Attorney: A Durable General POA is a General POA that remains in full force and effect even if the principal becomes incapacitated. A General POA is void if you are unable to make decisions for yourself because of incapacitation. Therefore, a Durable General POA is usually preferred as an estate planning tool to give another person the authority to act on your behalf regarding finances if you cannot act yourself. A Durable General POA usually avoids the need for a conservator.
- Specific or Limited Power of Attorney: A Limited POA gives the agent the ability to act on your behalf for a specific purpose. Limited POAs are often used when the principal cannot be at a real estate closing. The Limited POA is effective only for that transaction, and the agent has no other power to act on the principal’s behalf.
- Health Care Power of Attorney: A Health Care POA or Medical POA grants an agent the power to make health care decisions for you if you are unable to make those decisions. Some individuals also execute a Living Will to ensure that their wishes concerning life-sustaining medical treatments are honored if they are suffering from a terminal condition.
Call a Texas Estate Planning Lawyer for More Information
When used correctly, a Power of Attorney can be a useful tool. However, POAs do grant broad and general powers. Therefore, we encourage you to consult with our Texas estate planning lawyers at the Law Office of Carey Thompson to discuss whether a POA is in your best interest.