A power of attorney is a legal document granting another person the authority to act as an agent on your behalf. You may set up a power of attorney as a general power of attorney, granting an agent full power to act on your behalf or a limited power of attorney, conferring power on the agent only for a specific event or time. Powers of attorney are an important part of planning for your future care as they allow another individual of your choosing to manage your financial resources and make medical decisions on your behalf if you are unable to do so yourself.
Powers of attorney are designed to terminate upon disability or incapacitation of the principal (person granting authority to an agent to act on his or her behalf) or after a certain event has taken place or time has passed. In order to avoid costly and time-consuming guardianship proceedings, a durable power of attorney may be established. A durable power of attorney allows an agent’s authority to make decisions on your behalf to continue if you become disabled or incapacitated.
If you are concerned about granting another person the power to act on your behalf while you are still able to make decisions for yourself, you may opt for your power of attorney to become effective only when you can no longer make decisions for yourself; this is called a springing power of attorney. This can become complicated with HIPAA laws that protect personal healthcare information, preventing your agent from receiving official proof that you are incapacitated (see What is HIPPA and How Does it affect Estate Plans? for more information).