Power of Attorney: Meaning and Types

What Is a Power of Attorney (POA)?

The term power of attorney (POA) refers to a legal authorization that gives a designated person the power to act for someone else. As such, a POA gives the agent or attorney-in-fact the authority to act on behalf of the principal. The agent may be given broad or limited authority to make decisions about the principal's property, finances, investments, or medical care.

Types of Powers of Attorney

The two key types of POAs are financial and health care. We outline some of the main differences between these two and highlight some of the main types of financial POAs.

Living Wills (Advanced Decision)

A Living Will is a term often used for a legal statement called an advance decision. An advance decision is something you put in place in case you later become incapacitated or terminally ill, and it enables you to refuse medical treatment if required in the future.

To put an advance decision in place, you need to be over the age of eighteen, and must be judged to have the mental capacity to make this type of decision about your future. If you wish to refuse life sustaining treatment in the future then an advance decision must be in writing.

Health and Welfare Attorneys

Where someone is looking generally at preparing for when they are older and considering putting something in place to cover welfare situations that may arise in the future, then it is appropriate to consider making a Health and Welfare Lasting Power of Attorney to appoint someone to make health and welfare decisions on your behalf should you lose mental capacity.

Last Will and Testament: Definition and How to Write One

What Is a Last Will and Testament?

A last will and testament is a legal document that communicates a person's final wishes pertaining to their assets. It provides specific instructions about what to do with their possessions. It will indicate whether the deceased leaves them to another person, a group, or wishes to donate them to charity.

A last will and testament can also handle matters involving dependents, the management of accounts, and financial interests.

Some states allow for non-standard or unusual wills, such as a holographic will, while others do not.

What Shouldn't Be Included in a Will

Property you hold jointly with someone else
Funeral plans: these should be in a separate document easily accessible after death by family or executor
Life insurance policies and retirement accounts: these should have beneficiaries designated on the account forms so they bypass probate and flow directly to the intended recipients