Before hopping into the main topic directly, let us first define the term power of attorney.
What is a power of attorney?
Power of Attorney is a legal document, which grants legal rights to a person for carrying out all sorts of medical, financial, business or personal matters, on behalf of another person. The person who authorizes the other person is termed as the grantor, donor or principal, and the authorized representative carrying out this process is termed as the attorney-in-fact (agent).
There are primarily four types of power of attorney:
In this article, we’ll be focussing on the differences between a general and a durable power of attorney.
General Power of Attorney
A general power of attorney grants a person to carry out all legal activities on behalf of another, without any restrictions.
Some of the common powers which fall under this category include;
Carrying our transactions, including the signing of cheques
Lending or borrowing money
Managing, selling and buying of real estates
Handling tax and returns
Carrying our medical decisions
Carrying out financial decisions
Managing business and taking all sorts of business-related decisions.
A general power of attorney would not be effective when the grantor dies or becomes mentally or physically incapacitated.
Durable Power of Attorney
A durable power of attorney is alike to a general power of attorney and grants a person to carry out all legal activities on behalf of another, without any restrictions.
However, a durable power of attorney remains to be effective even if the grantor gets mentally or physically incapacitated.
A durable power of attorney finishes being effective on the death of the grantor or when the grantor revokes the rights granted to the other person.
A durable power of attorney is mainly of the following types:
A medical power of attorney
This durable power of attorney allows a person to carry out all the medical decisions on behalf of another person when they are ill/unable to take decisions on their own.
A financial Power of attorney
This durable power of attorney allows a person to carry out all the financial decisions on behalf of another person when they are unable to take decisions on their own.
A durable power of attorney offers power to a person for a longer duration, when compared to a general power of attorney.
Depending upon the condition of the grantor, the selection of a power of attorney should be done, and if the grantor is willing to vacate all the power and live peacefully, then a durable power of attorney will be a perfect choice. But ultimately, the grantor should have complete faith on the person to whom he/she is going to transfer all the powers.