Understanding the Different Types of Power of Attorney Documents.
Although mortality and emergency situation are uncomfortable to think about, proper planning can make sure that your interests are taken care of by the people you trust. The following descriptions are brief but explain the use of each type of Power of Attorney.
A limited power of attorney is usually assigned for a specific purpose and time period. It's often used when you can't handle certain affairs due to other commitments or short-term illness.
A general power of attorney is much more comprehensive and gives your agent broad powers to act on your behalf, including managing all your financial transactions, signing documents, settling claims, operating your small business and any other financial duties you specify. General power of attorney can remain effective until you pass away, but in most States, it will automatically end if you become incapacitated.
A durable power of attorney serves the same function as a general power of attorney, but it remains effective even after you become incapacitated. That way, your agent can manage all your affairs after your incapacitation without need for court involvement.
A tax power of attorney is for communications with the Internal Revenue Service (IRS). If you want someone — like your accountant, attorney, or certified tax preparer — to act on your behalf in dealings with the IRS, you’ll need to fill out IRS Form 2848, Power of Attorney and Declaration of Representative. Note that this form only affects dealings with the IRS. It doesn’t give power of attorney for any other matters.
For more information and help filing these documents, contact the estate planning professionals at The Center for Financial, Legal and Tax Planning - (618) 997-3436