The Importance of a Power of Attorney – What Every Individual Should Know

Power of Attorney

Depending on the Power of Attorney (POA) type, you can grant someone else, an agent or attorney-in-fact, broad or limited authority to make decisions for you. This could involve handling financial, medical, and real estate matters. Your agent should be someone you can fully trust and rely on. If not, you risk making expensive errors that could harm your estate.

Creating a Power of Attorney

A power of attorney enables someone to make decisions in your absence. Depending on state law and the document’s language, it can have a limited scope or be broad and general. For example, you might grant your spouse a springing power of attorney to handle real estate closings and vehicle registrations when you are not there.

When creating a power of attorney, you must consider who to name and what authority to give. There are also safeguards to prevent abuse, such as requiring your agent to report their actions periodically to someone else. A knowledgeable estate planning attorney can create a power of attorney that satisfies your requirements and safeguards your rights. Additionally, it’s critical to update a POA whenever circumstances alter. This could entail getting hitched, relocating to a new residence, or starting a job in a different city.

Using a Power of Attorney

The power of attorney grants a powerful legal right to your agent. The person you choose can carry out all sorts of tasks on your behalf, from banking transactions and real estate decisions to dealing with the government and retirement benefits. Your agent can also decide how you will be cared for during incapacity. Depending on the type of power of attorney you create, your agent may be able to make medical decisions for you.

Ensure that the person you select as your agent is capable, trustworthy and honest. Suppose you are worried about your family member taking advantage of you or making costly mistakes. In that case, you can have a professional guardian ad, litem, or other expert monitor the actions of your agent and report to you regularly. Limiting your agent’s powers is also possible so they only deal with certain affairs.

Revocation of a Power of Attorney

The people and situations in your life change often. Consequently, it is important to reevaluate your powers of attorney regularly. A few key changes include getting married or divorced, moving to a different area, and changing jobs that require significant travel or could put you in danger. You can revoke a power of attorney at any time. You do not need to provide a reason. It is also possible that the person you named as your agent has demonstrated they are unfit for the job, such as a mental or physical barrier.

It is important to revoke a power of attorney formally. This involves a written statement that is signed and notarized. This document should be provided to the formerly nominated agent and any institutions with it on file. This prevents the formerly-nominated agent from acting on your behalf in the future and avoids confusion. Alternatively, you can physically destroy the original document.

Choosing Your Agent

Power of Attorney

A power of attorney gives someone powerful authority to handle financial matters and health care on behalf of another. This is a serious responsibility, so when choosing an agent—also called an attorney-in-fact—it is important to pick a trustworthy person. A good option is to use a spouse, child or trusted friend. It is also a good idea to name backup agents if your first choice cannot serve for any reason.

In addition to ensuring your agent is a person you trust, you will want to ensure that the POA document includes some safeguards. For example, a POA can stipulate that the agent must report actions periodically to an outside party (such as a family member or professional). This may help prevent acts of self-dealing or fraud. A lawyer can help you draft the POA to include these provisions. Also, your lawyer can review the language of a POA and make suggestions to ensure it meets your state’s requirements.