Using a General Power of Attorney by Belle Wong, J.D.

Using a General Power of Attorney

Need to draft up a general power of attorney as part of your estate planning? Find out the role this document plays and in what instances you might need it.

by Belle Wong, J.D.
updated April 15, 2020 · 3 min read

A general power of attorney can be an invaluable document in your estate planning toolkit. However, to make sure you're using the correct document for your needs, it's essential to understand what a general power of attorney does and how it differs from other kinds of powers of attorney.

Using General Power of Attorney

What Is General Power of Attorney?

Under a general power of attorney, the person you designate to act on your behalf has the authorization to deal with a broad range of activities and transactions on your behalf, such as real estate contracts, tax issues, and business and investment decisions

The person who executes a power of attorney is known as the principal. In the document, the principal gives their representative, also known as an attorney-in-fact, the authority to perform specific actions on their behalf.

A power of attorney (POA) can be very specific in terms of what the attorney-in-fact is authorized to do. For example, if you will be out of state when a business transaction is closing, you might execute a power of attorney that authorizes your attorney-in-fact to sign the closing documents in that particular transaction on your behalf.

Another type of POA that's common in estate planning is the healthcare POA, which typically authorizes someone to make medical decisions on your behalf if you become incapacitated.

General Power of Attorney vs. Durable Power of Attorney

Generally speaking, a power of attorney becomes invalid in the event you become incapacitated. That means that for estate planning purposes, you should draft a POA that doesn't terminate if you become too ill to handle your own affairs. This kind of POA is known as a durable power of attorney.

This doesn't mean, however, that you must choose between a general power of attorney and a durable power of attorney. A general POA will continue to be valid in the event you're incapacitated as long as it includes wording to that effect.

To make a general POA an effective part of your estate plan, you should also make it durable, so that it will continue to function as designed in the event you become ill or are injured. Without the appropriate language to keep a general POA valid, the person you've trusted to act as your attorney-in-fact can no longer act on your behalf as they did prior to your becoming incapacitated. This can have significant consequences for your estate since there will be no one with the power to make decisions on your behalf.

It's important to note, however, that a durable POA terminates upon your death, no matter what wording you include. This is because a POA is effective only during your lifetime. Upon your death, your executor assumes the primary decision-making role when it comes to dealing with your estate.

How to Obtain a General Power of Attorney

Whether you begin with a template or consult with an estate planning attorney, drafting a general power of attorney does not have to be particularly complicated. However, if you intend to draft the POA yourself, you should check your applicable state's laws, as requirements vary.

For example, most states have signature requirements, but depending on your state, the document may need to be signed in front of a notary public, in front of witnesses, or both. If witnesses are required by your state, you should also check the eligibility requirements for individuals, as these too vary by state.

Choosing an Attorney-in-Fact

Despite the term's wording, an attorney-in-fact doesn't have to be a practicing attorney, although they can be. An attorney-in-fact is simply the person you choose to act as your personal representative according to the terms of the POA document.

It's important to carefully consider who you want as your attorney-in-fact, as this person will hold essentially the same powers you do when it comes to your business and financial decisions. In the context of your estate plan, this becomes even more important, as your attorney-in-fact will be making the decisions you're no longer able to make because of illness or injury.

Finally, given the important role the attorney-in-fact plays in estate planning, in addition to evaluating their trustworthiness and decision-making competence, you should also talk it over with the individual you'd like to designate, in order to be certain it's a role they're comfortable accepting.

The general power of attorney can play a pivotal role in your estate planning process. Making it a durable power of attorney as well means you will have someone authorized to handle your affairs in the event you're no longer able to.

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Belle Wong, J.D.

About the Author

Belle Wong, J.D.

Belle Wong, J.D., is a freelance writer specializing in small business, personal finance, and marketing topics. Connect … Read more