General power of attorney: comprehensive power of attorney for a person of trust

In life, there are always unforeseen situations. Strokes of fate can confuse one’s own plans. For such cases, it's good to have certain precautions in place, such as a general power of attorney.

But what exactly is a general power of attorney, in what situations does it make sense, and what should be borne in mind? In this article you will find answers to these and many more questions.

Definition: what is a general power of attorney?

A general power of attorney is a legal document. Through this document, one person (principal) authorizes another (attorney) to carry out certain actions and make decisions on their behalf. The power that comes with a general power of attorney is very extensive. As a rule, it covers all areas in which principals can act themselves. These include:

• Deciding on medical treatments

• Applications to authorities

• Terminating or taking out insurance

• Concluding legal transactions

• Making transfers or withdrawals from your bank account

In addition to the general power of attorney, you can specify in an advance care directive who may represent you if you become incapable of sound judgment. This way, you can ensure that a person of trust can make the necessary decisions in an emergency.  They are therefore in a position to deal with almost all legal, financial and personal matters of the principal. The difference between the terms “general power of attorney” and “advance care directive” is explained again in detail at the end of the blog.

Cases where a general power of attorney is used

A general power of attorney can make sense in various situations. For example, as you get older or become seriously ill, you may no longer be able to manage your financial, legal or personal affairs yourself at some point.

The general power of attorney ceases to be valid if the principal is no longer able to act. Then the above-mentioned advance care directive becomes relevant.

But a general power of attorney also has advantages for foreseeable – and less dramatic – situations: for example, for a longer stay abroad, a general power of attorney may be useful if there are matters to be dealt with while you are away from home. A general power of attorney may also be useful for people with complex financial circumstances or business people. It simplifies the management of assets, capital or corporate structures, or complex and time-consuming processes such as selling a house: with a general power of attorney, you can simplify this by having a person of trust lead the negotiations, prepare contracts, and conclude the sale. This also applies if it is not possible for you to handle the sale yourself for other reasons.

Content and elements of a general power of attorney

A general power of attorney contains various elements. These should define precisely what rights and powers are granted to attorneys and under what conditions and to what extent they are allowed to exercise them. The most important elements of a general power of attorney are:

• Details of the persons involved: one of the most important elements covers the names and addresses of the persons involved. In addition, they can also appoint a replacement attorney if the person originally authorized is no longer able to perform their duties.

• Scope of power of attorney: here you define the areas in which the power of attorney is valid. A general power of attorney generally covers all legal, financial and personal matters. This includes, for example, asset management, representation in legal matters and the conclusion of contracts.

• Special instructions or restrictions: generally speaking, a general power of attorney is far-reaching and more or less all-encompassing. But of course, as a principal, you can exclude certain areas. As a rule, the sale of real estate is excluded unless it is explicitly mentioned. It is also possible to give specific instructions on how authorized representatives should proceed in certain situations.

• Validity period and conditions: as a rule, you define when the power of attorney enters into force and under what circumstances it ends. It's important to note that it is only valid for as long as the issuing person has the capacity to act. If the person is incapacitated, the advance care directive enters into force.

• Further legal information: depending on your specific requirements and your individual situation, you can list additional legal provisions in the power of attorney. This also includes specifying a rule to replace the attorney in certain circumstances.

Difference from other orders and powers

• An advance care directive authorizes a selected person to act as representative in the event of mental incapacity. These actions relate to administrative, financial and personal matters and must be carried out in the interest of the person who issued the directive.

• Special powers of attorney are limited to individual areas or tasks, such as the sale of real estate, representation in court proceedings, or financial and banking transactions.

• In a living will, you set out your specific wishes for medical treatment. This includes instructions on life-support measures, pain management, and other medical procedures. A living will relates exclusively to medical decisions and has no impact on financial or legal matters.

• With instructions in the event of death, you determine how your estate should deal with legal issues relating to wills, inheritance, and funerals. The document includes instructions for burial, division of assets, and may also include wishes regarding the funeral.

• The will specifically relates to the distribution of assets after death. It can also appoint an executor of a will. This person ensures that the wishes set out in the will are implemented. Please note: the will must be notarized or drawn up by hand.

Why does a notarization make sense?

With a general power of attorney, it is essential that the document is both legally valid and tailored to your specific needs. The power of attorney should therefore be clearly and unambiguously formulated to avoid any misunderstandings. You can use a template for your general power of attorney. However, it is advisable to amend the power of attorney individually. To be on the safe side, you can therefore also seek legal advice. It is best to discuss your general power of attorney with a notary or attorney. These experts are familiar with such important and legally binding documents and ensure that the power of attorney meets your needs. 

Even if you draw up the general power of attorney yourself with a template and without a notary, it is advisable to have the document subsequently notarized. Notarization gives the document greater legal certainty and can serve as proof of the validity of the power of attorney in case of doubt. The costs of notarization are based on the value involved and include a fee. A notarized copy of the power of attorney is even required in a few cases: for example, in real estate matters, in the context of articles of association, in the case of inheritance provisions or for certain banking transactions.

Tips for your general power of attorney

If you want to issue a general power of attorney, you should consider several important aspects. Here are some tips to make your general power of attorney safe and effective:

1. Be aware of the power you are transferring!
   A general power of attorney gives the attorney far-reaching powers. Understand exactly what decisions and actions your person of trust can take on your behalf.
   
   
2. Select your person of trust carefully!
   The attorney should be a person you fully trust.
   
   
3. Explain your wishes and expectations clearly and explicitly!
   Your person of trust must understand exactly what tasks they are carrying out. At the same time, it is important that you explain how the attorney should act in different situations according to your wishes.
   
   
4. Inform relevant persons and institutions!
   From family and friends to banks and insurance companies: certain persons and institutions that could be involved in an emergency should be aware of the existence and location of the general power of attorney.
   
   
5. Keep the power of attorney safe!
   A general power of attorney is an important document. Keep it in a safe place. If necessary, make copies for relatives or other relevant parties.