What You Need to Know about the Power in a Power of Attorney

Before you execute a Power of Attorney – or try to use one in which you are named as an Agent – you need to understand exactly what power is granted in that Power of Attorney (POA). While most people understand the general idea behind a POA, many do not understand the breadth and types of authority that can be transferred to someone in the various types of POAs. A Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains what you need to know about the power in a Power of Attorney.

What Is a Power of Attorney?

At its most basic, a Power of Attorney is a legal document that allows the person executing the document (referred to as the “Principal”) to grant another person (the “Agent”) the authority to act on their behalf in legal matters and transactions.  The amount and type of the legal authority you grant to an Agent depends on the type of POA you create and the terms of that POA.  

What Is the Difference between a General and a Limited Power of Attorney?

A Power of Attorney can be a general POA or a limited POA. A general POA grants your Agent almost unfettered power to act on your behalf in legal matters. Consequently, your Agent can typically do things such as withdraw funds from your financial accounts, sell or encumber property and assets you own, and even bind you to a contract.  

A limited POA only grants to your Agent the limited, and specific, authority stated in the terms of the POA. For example, you might grant an Agent the limited power of attorney to sell your care while you are out of town.  Parents with minor children also frequently use a limited POA to grant a caregiver the authority to consent to medical care for their children in the event of an emergency.

What Is a Springing Power of Attorney?

A Springing POA is a POA that has special language in it that causes the Agent’s authority to “spring” into action at a specific time or when a specific event happens. For example, you might create a general POA that only takes effect if you leave the United States for more than 24 hours. A Springing POA can also be used as an incapacity planning tool by making the incapacity of the Principal the “event” that causes the Agent’s authority to take effect. 

What Is a Durable Power of Attorney?

Historically, a Power of Attorney automatically terminated upon the death or incapacity of the Principal. Because the possibility of incapacity is precisely why people often want to have a POA in effect, the concept of a “durable” POA evolved. A durable POA means that the Agent’s authority survives the incapacity of the Principal. Both a general and a limited POA can be made durable.

What Is a Durable Power of Attorney for Health Care?

Even a general Power of Attorney has limits. Exactly what those limits are will depend on the state; however, most states (including Tennessee) prohibit an Agent from making health care decisions for the Principal using a general POA. Instead, a special type of POA must be executed by the Principal. Known as a “Durable Power of Attorney for Health Care,” this is an advanced directive that allows you to appoint someone to make healthcare decisions for you if you are incapacitated and unable to make them yourself at some time. This type of POA is usually created along with a Living Will that lets you make certain medical treatment decisions for yourself now so you are certain your wishes will be honored later.

Contact a Murfreesboro Estate Planning Attorney 

If you have additional questions or concerns regarding what type of Power of Attorney you should create, or about the authority you have as an Agent under a POA, consult with an experienced Murfreesboro estate planning attorney at Bennett |Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.


Stan Bennett