Asian couple and their lawyer
When you authorize someone, you are authorizing them to make decisions for you and on your behalf. Whatever the agent, as that person is called, decides is as binding as if you had made the decision yourself. So only give power of attorney to someone you absolutely trust. While a Power of Attorney does not require a specific form, almost every jurisdiction will offer one to help you understand this process. Here’s what you need to know.
Consider working with a financial advisor when creating an estate plan that includes creating a power of attorney and designating a testator.
What is a power of attorney?
The power of attorney is a far-reaching delegation of authority.
When you authorize someone, you are giving them legal authority the act that is right for you. You have the right to contract on your behalf, manage your finances, buy and sell your property, make medical decisions, and generally make most decisions to which you are legally entitled. A proxy can make just about any final decision you can.
People usually rely on a power of attorney when they are unable to make or enforce their own decisions. Most of the time this has to do with old age, mental ailments, or some other form of mental retardation. If someone is physically incapable of self-action (e.g., someone in a coma) or does not have the mental ability to understand their own affairs (e.g., someone with advanced Alzheimer’s disease), someone can be empowered accept to keep his affairs in order.
In other situations, people authorize someone to speak on their behalf when they cannot be present. For example, litigants often authorize their attorneys to resolve a case on their behalf that they are absent from. Or someone can give power of attorney if they are abroad for an extended period and are too far away to take care of their own affairs.
When granting power of attorney, you can specify the scope of your power of attorney. Getting this right is extremely important as the powers can be very extensive. If you’re not careful, it’s easy to transfer far more power than you intended.
The story goes on
The most common tasks include:
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General Power of Attorney – This allows the owner to make practically all final decisions as if you had made them yourself. They can open accounts, sell assets, enter into contracts and usually act on your behalf on your behalf.
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Limited power of attorney – Sometimes known as a special power of attorney. In this case, you have provided the precise choices the owner can make for you. For example, in our case above, you could give your attorney power of attorney to resolve a dispute on your behalf. Or you can give someone a power of attorney to sell a house. This association is generally interpreted narrowly, that is, anything that you omit is reserved for you.
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Medical Power of Attorney – You have authorized the person to make medical decisions for you if you are physically (e.g. in a coma) or mentally disabled (if a doctor has classified you as mentally unfit).
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Financial power of attorney – You have authorized the person to make all financial decisions for you. Unless you specify otherwise, it gives them almost full authority to act on your behalf over your money, property, and other assets. A common subset of this is a tax mandate, in which you give someone (often an accountant) full authority to act on your behalf with the IRS and other tax authorities.
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Family / parent power of attorney – You have authorized this person to act as the legal parent or guardian of your child. While this is common in custody disputes, it can also be used when the parent is absent for an extended period of time. For example, if a single parent has been employed by the military, they can assign a family power of attorney to their child’s caregiver.
A person with your power of attorney cannot directly replace or override your own decisions unless you have been classified as mentally ill. However, you can act with your authority, which can create problems if you intend to do the same things as them yourself.
How do you declare a power of attorney?
Senior man signs a power of attorney form
Each federal state offers a sample form for granting power of attorney, which you can find here on this website. You can also search for forms dedicated to specific delegations. You can also find similar templates here and on your state’s website. Although forms are helpful, a power of attorney declaration does not require a special form. You can handwrite your own power of attorney if you wish.
The only strict requirements for a legally binding assignment are:
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The granting of power of attorney must be in writing;
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It must indicate the scope of the powers, otherwise it is a general power of attorney;
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It must be signed by you (the authorized representative);
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And it must be officially notarized.
Note that unlike many legal documents, a simple signature is not enough. You can write a contract or even a will on the back of a cocktail napkin, but the power of attorney must be notarized. If not, a third party will refuse. Although laws like these are usually very specific, this author is not aware of any jurisdiction that deviates from this rule.
The only exception to this rule is if you have been classified as mentally ill by a doctor or court. In this case, the power of attorney will be transferred to a caretaker on your behalf.
You don’t need a lawyer to power someone, but we strongly encourage you to contact one. Most law firms also have a notary public, which makes this step easier.
To declare a power of attorney, you must be legally sound. If a doctor or judge has declared you incapable of making a decision, a power of attorney is not valid. If someone wants to challenge the power of attorney, they can also try to prove that you were out of your mind when it was granted. This would have to be decided by a court.
You can revoke the power of attorney at any time and by any means. You do not have to notarize this revocation or make a note of it. That means you should do this. If you have formally issued a power of attorney, you should formally revoke it. This ensures that there is no argument about whether and when this authority ended.
Sunset Clauses, Persistence, and Lead Powers
Permanent power of attorney form
Under normal circumstances, the power of attorney loses its effect if you become mentally or physically incapacitated. This also applies if you have signed the form in a mental state. (This means that the next necessary steps can be carried out in an uncomplicated manner through an already existing power of attorney.) To prevent this, you can add a so-called durability clause to your power of attorney form. This clause can stipulate that your power of attorney will remain in effect if you are found to be incapable of doing business.
You can also write a permanent power of attorney that will only take effect if you are deemed to be mentally retarded. This is a way to protect yourself from illness or infirmity by determining in advance who will receive their authority if something happens to them. For example, parents often create a permanent family power of attorney so that their children’s guardianship is automatically overridden if something happens to them.
The spring power of attorney is similar to a durability clause. This takes effect (or “jumps into effect”) when a certain condition is met. For example, a soldier can set a financial health care proxy that comes into effect every time he is deployed.
Finally, you can write sunset clauses in your power of attorney. This stipulates the conditions under which the power of attorney ends. In most cases, a fixed period of time is used, e.g. B. a date or a length of months after which the power of attorney automatically expires. Unless you are creating a permanent power of attorney, this is strongly recommended.
The bottom line
Powers of attorney forms can be found on most state and county websites, or you can write your own forms. This is a comprehensive power of attorney that can help you manage your affairs whether you are sick, incapacitated, or simply out of reach. You can give up decision-making rights on topics such as healthcare, business decisions or real estate transactions. The permanent power of attorney takes effect immediately. The spring power of attorney, on the other hand, takes effect if you are unable to act.
Estate planning tips
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Good advice can help you in almost any situation. With SmartAsset’s matching tool, you can find a financial advisor in your area in minutes to help you plan your next steps. They may not need to take over your portfolio, but they can help you make good decisions about the future. If you’re ready, go ahead now.
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Your agent may need to make decisions about your 401 (k) account. Use our free 401 (k) calculator to find out how much money you will have in your account by the time you retire.
Photo credits: © iStock.com / Tzido, © iStock.com / SrdjanPav, © iStock.com / KLH49
The contribution Where can I get a power of attorney? first appeared on the SmartAsset blog.
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