Why every person should have a Power of Attorney.
- Decides who will handle your financial affairs while you are away
- Decides who will handle your financial affairs if you are unable to act for yourself
- Chooses who will make health decisions for you when you are incapacitated
Definition of Power of Attorney
A Power of Attorney is a document that allows you to choose or name someone you trust to make financial decisions on your behalf. This allows the person you name as your Agent in the Power of Attorney to make decisions about your bank account, stock accounts, retirement accounts, mutual fund accounts or any other financial accounts. It is important to know well the person you turn your finances over to and be sure that they are trustworthy and competent to handle your financial affairs. The Power of Attorney can become effective immediately on the legal authorities you have named in the Power of Attorney. If you leave the country for some type of business, or are incapacitated you would not be able to make these important decisions for yourself, therefore a Power of Attorney is needed.
Need for a Durable Power of Attorney
A Power of Attorney that continues to be in effect even if you become mentally or physically incapacitated is known as a Durable Power of Attorney. This avoids a court stepping in and taking over the control of your financial affairs. Unless you have a Durable Power of Attorney the Court will appoint someone to make these decisions for you and these decisions may not be what you yourself would have made had you been able to make these decisions for yourself.
Authority under Durable Power of Attorney
The person you nominate or choose as your agent will be known as the “Attorney-in-Fact” who will carry out one or as many of your financial dealings as set forth in the Power of Attorney Agreement. Some of these responsibilities are as follows:
- Pay for support and care
- Borrow money
- Conduct banking transactions
- Deal with real estate or personal property
- Deal with insurance and retirement claims
- Prepare and file income taxes
- Make gifts
- Deal with Social Security benefits
Requirements to grant a Power of Attorney
The only primary requirements to granting a Power of Attorney are:
- Soundness of mind by the party giving the Power of Attorney. That person must be mentally competent and know at the time what they are doing.
- There must be at least one witness and one notary public. These witnesses must be disinterested parties and cannot be an heir to the estate of the party granting the Power of Attorney so there is no conflict of interest. The grantor and witnesses should in most cases have their signatures notarized.
Power of Attorney Terminates at Death
The Power of Attorney no longer is valid upon the death of the grantor who granted it. If the assets at this time are not owned by a trust, it normally is necessary to go to the Court of jurisdiction and obtain in a Probate Action what is called a “Testamentary of Letters” in order to carry out the wishes of the deceased at their death.
Power of Attorney can be revoked
If the person is not incapacitated and is mentally capable of understanding what they are doing, they may revoke the Power of Attorney and change it to another party, or revoke it period. Their reasons can be their own and do not normally have to be qualified.
Health Care Power of Attorney
In the same sense that you grant Power of Attorney to someone you trust to make your financial decisions for you, a Health Care Power of Attorney is given to those whom you trust with your health well being. These are normally members of your family, such as the spouse or adult children or other close relative. They will make medical decisions about your care and medical well being. This normally goes hand in hand with a Living Will which sets forth the medical decisions you have made in the event of some type of medical crisis from a stroke, heart attack, or accident.