Powers Of Attorney
A power of attorney, also known as a durable power of attorney, allows a person to act on your behalf. While you as the principal can decide what powers to give this person, who is known as your “agent” or “attorney-in-fact,” in general these powers deal with financial matters such as banking transactions and transactions involving your property.
A power of attorney is an important piece of any successful estate plan as it allows someone to take care of your finances when you are incapacitated and unable to do so. For instance, a bank will not allow someone – even your spouse – who doesn’t have access to your account to get money out of it to pay your bills and other expenses. If you do not have a power of attorney, someone will have to go to court to appoint a guardian to handle your affairs, and this can be both very expensive and an additional source of stress in what may already be a difficult time.
A power of attorney can also be used if you are unable or unwilling to manage your financial affairs and would rather have somebody else do so for you.
There are numerous forms of power of attorney available, so it is important to work with a lawyer to help you make sure you are using the power of attorney that can best achieve your goals. Some examples include:
General power of attorney is very broad in scope.
Limited power of attorney is typically used for a short amount of time or for a specific purpose, such as having access to your accounts at a certain bank or transferring a particular piece of real estate.
Durable power of attorney continues to operate after the principal who made the power of attorney becomes incapacitated. All powers of attorney are durable unless otherwise stated in the document.
Springing power of attorney is generally not effective until the principal becomes incapacitated. Anyone can serve as your attorney-in-fact. However, it is important to only give the power of attorney to someone you trust because the powers that this document grants that person allow them to act in your place.
Have your power of attorney prepared before you need it because in many cases it is only going to be used when you are incapacitated. And one of the legal requirements for a power of attorney to be valid is that it must be executed by a person who is deemed competent under the law. Otherwise, if you are incapacitated, you will be unable to execute this document and your family is going to have to go to court to have a guardian appointed to handle your affairs, which is an expensive procedure that you want to avoid if possible.