What is a Power of Attorney and How can it be used to my Benefit?

An important part of Estate Planning is the Power of Attorney (POA). A Power of Attorney is accepted in all states, but the rules and requirements differ from state to state.

A Power of Attorney allows you to designate one or more persons with the power to act on your behalf as your Agent/Attorney-in-Fact either for convenience or if you become disabled or incompetent.

An “Agent” or “Attorney-in-Fact” is the person that you designate in a power of attorney to act on your behalf.

Your agent at your designation will be given the legal right to act in your best interest and on your behalf in case you are unable to act.

The powers you give to you agent may be broad or limited. The powers may be limited to a particular activity, such as closing the sale of your home, or be general in its application.

The powers given to your agent may give temporary or permanent authority to act on your behalf.

The power may take effect immediately at the date of your execution, or it may only take effect upon the occurrence of a future event. A future event, such as a determination that you are unable to act for yourself due to mental or physical disability. This is called a “springing” power of attorney.

All power of attorney designations may be revoked, but most states require written notice of revocation to the person named to act for you.

It is important that you give your family the tools to help you if you are unable to help yourself.

When does my Agent/Attorney-in-Fact act on my behalf?

Typically, if you become sick or disabled, either temporarily or permanently, this is the person you have designate to assist you when you cannot act on your own.

With a valid Power of Attorney, your Agent can take any action permitted within the document.

Often your agent must present the actual document to invoke the power.

For example, your Agent CAN:

• act on your behalf to sell an automobile. The motor vehicles department generally will require that the power of attorney be presented before your agent’s authority to sign the title will be honored.
• sign documents to buy or sell real property on your behalf must present the power of attorney to the title company.
• with the assistance of a broker or banker to affect the sale of securities or opening and closing bank accounts.
• signing checks for you.

Why would Anyone Give a Power of Attorney to Another Person?

The simple answer is for Convenience, Absence, or Incapacity.

A Power of Attorney prepares you and your family in advance for situations where you may be unable to act on your own behalf due to incapacity or absence.

• Convenience -If you are buying or selling assets and do not wish to appear in person to close the transaction, you may take advantage of a power of attorney.
• Absence or Incapacity – A Power of Attorney allows you to prepare for situations when you may not be able to act on your own behalf due to absence or incapacity. Such a disability may be temporary, for example, due to travel, accident, or illness, or it may be permanent.
• A Power of Attorney is the most important and powerful tool you can have in your estate planning toolbox.

For example…

If you do not have a power of attorney… and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act for you. People appointed in this manner are referred to as a Guardian (handles healthcare), and a Conservator (handles money) depending upon your local state law.

If a court proceeding is necessary, you may not have the ability to choose the person who will act for you. Having a valid well thought out Power of Attorney allows you to choose now who will act for you in the future and allows you to define your own authority and its limitations. A Power of Attorney provides greater security against having a Guardian or Conservator imposed by the judge at the request of your “loved ones.”

Who Should You Choose to Be Your Agent?

You may wish to choose a family member to act on your behalf. Many people name their spouses or one or more children. In naming more than one person to act as agent at the same time (co-agents), be alert to the possibility that all may not be available to act when needed, or they may not agree.

The designation of co-agents should indicate whether you wish to have the majority act in the absence of full availability and agreement.

Regardless of whether you name a single agent or co-agents, you should always name one or more successor agents to address the possibility that the person you name as agent may be unavailable or unable to act when the time comes.

With that said… there are no special qualifications necessary for someone to act as an attorney-in-fact except that the person must not be a minor or otherwise incapacitated.

Your Agent could be a Child, a parent, a caregiver, a friend, or a neighbor? It is not always an easy decision, but it is a very important decision not to be entered into lightly.

Remember – You are giving Your Agent broad authority with little restriction. In simple terms a power of attorney document gives the agent the authority to act and do what you could do except vote, get married or change your Will.

Trustworthiness is key when choosing an Agent.

The best person to pick as your Agent is someone you trust. Integrity, not financial acumen, is often the most important trait of a potential agent.

THE POWER OF ATTORNEY IS THE MOST POWERFUL DOCUMENT YOU CAN SIGN. AFTER SIGNING YOUR POWER OF ATTORNEY AND GIVING IT TO YOUR AGENT… YOU HAVE NO CONTROL. THIS MAKES A POWER OR ATTORNEY BOTH EXTREMELY USEFUL AND EXTREMELY DANGEROUS AT THE SAME TIME.

Will my Power of Attorney expire?

Today, most states permit a “Durable” Power of Attorney that remains valid once signed until you die or revoke the document.

However, it is important to meet with your lawyer, to revisit your power of attorney and consider whether your choice of agent/s still meets your needs especially after changes in your life circumstances occur such as death, disability, and divorce etc.