A Power of Attorney is a document that operates during your lifetime. This document grants another person the power to stand in your shoes and take any action you can take with respect to your property and other financial rights. The purpose of this document is to ensure someone can handle all of your financial and legal affairs for you without the need to seek the appointment of a guardian or conservator through the Probate Court (a costly and public process).
Some actions your “attorney-in-fact” or agent might take include: writing checks to pay your bills, opening or closing bank accounts, withdrawing funds from your retirement account, discussing your benefits with the Social Security Administration, and so on. A well-drafted Power of Attorney should enable the agent to do absolutely anything you could do if you were able, even make gifts to your family members or favorite charities.
Note that a Power of Attorney is usually valid as soon as you sign it. It is NOT only effective if and when you become ill, as is commonly misunderstood. If a Power of Attorney was only valid if you were incapacitated, then it would still be necessary to prove you were incapacitated and defeat the very benefits of the document – efficiency and privacy.
A “springing” Power of Attorney, on the other hand, is only valid when you are shown to be incompetent. There is no guarantee that a springing Power of Attorney will be accepted by financial institutions and other entities without a court adjudication of your incompetency, thus defeating the purpose of the document. So, although some clients still feel more comfortable with the springing Power of Attorney, it is not generally recommended.