Generally, a power of attorney is created when you give (“assign”) to someone else your legal right to act on your own behalf.
There are different powers of attorney types, which vary in name depending on which State law governs your power of attorney document.
The type of power of attorney you create is affected by:
- When your agent’s power kicks in (now or in the future?)
- How many agents you create
- If multiple agents are created, whether those agents can act unilaterally or must act jointly
- Which powers you want to assign (financial, medical, and subcategories of each)
The different powers of attorney types are distinguishable, based on:
- the type of right you assign,
- when you assign that right, and
- how long you want the assignment to last.
1. Springing vs. Durable Powers of Attorney Types
“Springing” and “Durable” powers of attorney types are not really opposites, but affect when the agent’s rights begin and end.
A “springing” power of attorney refers to powers that are transferred from the principal to the agent at some point in the future. The rights “spring” forth upon the happening of a certain event, such as when the principal becomes incapacitated.
A “durable” power of attorney addresses whether a power of attorney in existence will remain in existence at the time the principal becomes “incapacitated.”
A principal is “incapacitated” when the principal loses the ability to make legal decisions on his own behalf.
2. How Many Agents You Create
Your power of attorney can appoint one or more agents to act on your behalf.
You can have one agent handle certain duties, and another agent handle others.
3. Whether Your Agents Are Instructed to Act Unilaterally or Jointly
In the case where you create a power of attorney with multiple agents, be sure to include, for each agent, whether the power of attorney is springing, durable, and whether joint agreement with other agents is required.
4(a). Which Powers You Assign – Financial vs Medical Powers of Attorney Types
California has different powers of attorney types.
Which one you choose depends on your reason for creating a power of attorney.
In California, the power of attorney is also called a “financial power of attorney,” because the types of rights that can be assigned with a power of attorney are typically financial in nature.
When you assign your agent the right to make decisions regarding your healthcare, on the other hand, this is a special kind of agency relationship.
When you assign your healthcare rights in California, it is not called a power of attorney, it is called an “Advance Healthcare Directive.”
To learn more about how the California Advance Healthcare directive can help you expedite and facilitate your healthcare, without burdening your loved ones, click here: California Advance Healthcare Directive
When a person assigns his rights in California using a power of attorney, he is considered the “principal.”
The principal must appoint someone called an “agent” (also called an “attorney-in-fact”) to act on his behalf.
4(b). Which Powers You Assign – General vs. Limited Powers of Attorney Types
A principal giving a general power of attorney gives his agent the power to act on behalf of the principal concerning all matters allowable under state law.
A principal giving a limited power of attorney gives his agent the power to act on behalf of the principal concerning certain small-scope financial tasks or projects.
Example:
Charlotte is a real estate investor using her personal funds as capital. She then creates a power of attorney, making her friend James her agent. She then gives James access to her bank account to purchase new real investments for her.
However, Charlotte decides to limit his access to just one bank account, and limits the dollar amount he can spend per transaction.
By giving James specific, limited powers, she has given James a limited power of attorney.
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