What is the Purpose of a Power of Attorney?

Special Power of Attorney

• The purpose of a special power of attorney is so a principal can complete a transaction without having to be present. For example, a businessperson can sign a power of attorney for an associate to act as an agent and sign real estate closing papers while the businessperson is traveling.
  
  

General Power of Attorney

• A general power of attorney is common when a person becomes mentally or physically incapable of handling her day-to-day affairs. Prior to her incapacity, the principal can appoint someone she trusts to serve as her agent and handle matters on her behalf. For example, the agent may be responsible for handling the person's finances, including conducting bank transactions and paying bills.
  
  

Health Care Power of Attorney

• A health care power of attorney limits an agent's power to decisions on a principal's medical care. Such decision-making power only arises if the person is incapable of providing his own directives. However, if a principal has a health care power of attorney, it is also important to have a living will because that lets the agent know what kinds of treatments the principal does or does not want.