Appointing A Power of Attorney

What is a Power of Attorney?

A Power of Attorney (“POA”) is a legal instrument that allows you to appoint an individual to handle financial and legal matters on your behalf. The individual you appoint (known as the attorney-in-fact) will be legally authorized to act and make financial related decisions. The laws for creating a power of attorney vary from state to state, but there are certain general guidelines that should be followed.

How do I select an agent for my Power of Attorney?

Because your agent will be making financial related decisions on your behalf, the agent will be privileged to sensitive information. The power granted to the agent can also be broad. Therefore, it is important that you choose someone who is honest, trustworthy and competent to make and handle financial decisions. A close family member (such as your spouse or adult children), a trusted friend or partner can be a good choice for your agent. Once you have identified some individuals, it is helpful to discuss your consideration with the prospective agent(s).

When is the Power of Attorney effective?

With one version, the Power of Attorney is effective as soon as you sign the document before two witnesses and have it notarized. You may wish to tell the agent that you do not want the person using the power unless you are incapacitated or unable to act for yourself. However, the agent could use the power as soon as he or she receives it.

Another version of the Power of Attorney enables you to choose a “springing” power which does not take effect until a specific triggering event happens, such your incapacity. However, there are several problems with springing Powers of Attorney. First, the agent needs an affidavit or statement from your primary physician stating that the triggering event has occurred before the agent is authorized to use the Power of Attorney. Secondly, many financial institutions have been reluctant to recognize the agent’s power under a springing Power of Attorney.

A Power of Attorney document from Lifetime Planners enables you to choose whether you want the power to be effective up execution or upon your incapacity.

Do I lose control or rights over my finances if I give someone a Power of Attorney?

No, you do not lose control or rights over your finances and property when you give someone a Power of Attorney because you are still the owner of your properties. However, it’s important to understand that by your agent is given legal authority to made financial related decisions just as if it were you making those decisions yourself.

There is always the potential risk that your agent may abuse the power by misappropriating your property or acting contrary to your wishes and best interest. Therefore, it is important that you choose someone who is honest, trustworthy and competent to make and handle financial decisions. A close family member (such as your spouse or adult children), a trusted friend or partner can be a good choice for your agent. Once you have identified some individuals, it is helpful to discuss your consideration with the prospective agent(s).

Do I need to have my signature witnessed and notarized on a Power of Attorney?

The laws for creating a Power of Attorney vary from state to state, but generally the document is signed by the principal and needs to be witnessed and acknowledged before a notary public.

Lifetime Planners make it extremely easy for you to create your Power of Attorney. All our estate planning packages includes one that enables you to designate individuals you would like to serve to make these financial related decisions on your behalf.