Power of Attorney (POA) designations can be confusing, but they are also vital for managing authority for both capable and incapacitated individuals. Let’s briefly review what a POA is, the various degrees of control granted, and how a POA grant terminates.
“A power of attorney is an instrument containing an authorization for one to act as the principal's agent that terminates at some point in the future either by its terms or by operation of law such as death of the principal or agent.”1
There are variations in the authority that a POA confers. Some are effective for almost any purpose (the one universal prohibition for POA holders is that they may not transfer the grantor's assets to themselves). In contrast, others are limited to specific situations. For example, suppose that Joe needs to be at a real estate closing in California on the same day that he must attend an important event in New York. Joe can designate a Power of Attorney to a business associate or other trusted individual and have that person represent him at the closing. In that case, Joe might grant a limited POA or a General one which will endure.
Each state determines the rules for designating (and overriding or revoking) POA grants for their residents. Twenty-eight states have adopted the Uniform Power of Attorney Act (UPOAA) which established standard rules and terminology intending to standardize the use of POAs.
A general power of attorney gives the agent authority to make almost any financial or other decision that the grantor could make for themselves, including buying, selling, and more. In most states, a General POA remains in effect until it is revoked or the grantor dies or becomes incapacitated. However, in some states, there is an opposite designation known as a springing power of attorney, which remains inactive until the grantor is no longer capable. In this case, the incapacitation of the grantor would activate the power of attorney rather than deactivate it, as would be the case with a general grant.
Typically, a general power of attorney is used as a convenience; the grantor entrusts the agent with the authority to carry out their expressed wishes. However, if the grantor can no longer act on their own or communicate their wishes to the individual holding their POA, the grant is revoked. The reason is to reduce the potential for the agent to take advantage of a prior POA grant by someone who later becomes diminished.
However, a general power of attorney can specify that the authority continues into the time when the grantor can't participate in decision-making. It could even grow into a broader grant with control of healthcare decisions. The POA grant should outline the distinction within the details of the POA grant.
1Source: USLegal.com