A power of attorney is an important document. Yet it is often neglected in estate planning. People tend to focus on their will and trust, naming a power of attorney at the last minute.
Any responsible adult, such as a lawyer, banker, or accountant, can act as your representative. However, your representative may be a member of your family, including a spouse, adult child, and possibly other relatives. By appointing a family member as your proxy, you avoid paying fees and keep sensitive information about your finances and other personal problems “in the family”.
This is an important decision that should not be taken lightly. What you need to know to get it right is outlined here.
What is a power of attorney?
A power of attorney, often also known as a POA, is a legal document that authorizes a person you trust (the agent or attorney) to make decisions on your behalf (the donor or grantor) and represent you vis-à-vis others. The authority can be broad, encompassing any act that the attorney can take, or it can be limited to specific acts, such as: You, the “giver”, “donor” or “creator” of the document, grant this ability in advance.
Is there a difference between different types of powers of attorney?
Powers of attorney come in various forms. It is best to do both at the same time, which is usually the case when evaluating or making your will.
There are two types of powers of attorney:
- A real estate and finance LPA – This gives your attorney the power to make financial and asset decisions on your behalf. Processing your bank or building society accounts, withdrawing pensions or benefits, paying bills or selling your house are examples of this. Once registered, you can use it immediately or keep it until you lose your mental capacity.
- An LPA for health and welfare – This enables your attorney to make decisions about your daily responsibilities (from personal hygiene and clothing to eating), medical care, care placement including life support medical care. It should only be used when you are unable to make your own decisions, and you must be okay with it while you are still able to.
What is the function of a power of attorney?
A power of attorney template is available for purchase or download. If you do, double-check that it is up to your state’s standards as these are different. On the other hand, this document can be far too important to leave to chance that you received the correct form and processed it correctly. The signature of the person who begins the POA must be notarized in many countries. In some states, witness signatures must also be notarized.
Finding a family law attorney in your area is a better option to start the process of obtaining power of attorney. If the cost of an attorney is beyond your budget, practically every region of the country has legal counseling agencies with certified attorneys.
Although the details may vary, the following guidelines apply by state:
- Get it on paper
- Determine who the parties are
- Delegate authority
- Define the term “shelf life”
- Notarization of the power of attorney
- Write it down
- Drop file
Choosing a power of attorney
A POA, like your home or car title deed, gives you a lot of ownership and responsibility. A medical POA really is a matter of life and death. Having a permanent POA that has been mishandled or abused can put you in financial hardship or bankruptcy. Therefore, you should choose your agent carefully to ensure that your preferences are implemented to the maximum extent possible.
It is important to appoint a trustworthy and competent person to act as your representative. Since this person has the same legal authority as you, any mistakes made by your attorney are difficult to redress.
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