Helping Clients Protect Themselves in the Long Run
When you are forming your estate plan, you may run across something called “power of attorney.” Likewise, you may have heard of this phrase because you are actually someone else’s power of attorney.
It is alright if you have a hard time understanding what a power of attorney document is, the powers this person has, and the role they will play in your life should they ever need to execute such authority.
Here’s what you need to know when considering your power of attorney and why one could benefit you and your family in the future.
What is a Power of Attorney?
Power of attorney is a legal document that gives one person the power to act for another. The person who drafts the power of attorney form is called the “principal.” The person who is granted the power of attorney is called the “agent.”
When you draft your POA document, you will define the parameters that must be met in order for your agent to have any decision-making powers. You can also have separate triggers that give authority to your agent. An example of this is limiting the decision-making powers of your agent for certain medical decisions. Perhaps you have a pre-existing condition, and you want your agent only to make decisions in regard to that condition should you be unable to.
Your power of attorney will allow your agent to make financial decisions on your behalf, as well. Your agent will have access to all of your financial accounts that are only in your name. This includes brokerage accounts, banking transactions, and business operating transactions. Your agent will not have access to trusts or your joint financial accounts.
Your agent can also make other major financial decisions. Selling real estate falls within the realm of their powers.
What is a Durable Power of Attorney?
An ordinary power of attorney expires should you become mentally incompetent or if there is an expiration date for the power of attorney document. A durable POA allows the agent to continue to act on the principal’s behalf, even if the principal becomes mentally incompetent.
This authority is often given to an agent who can manage financial decisions and end-of-life decisions. When creating your durable POA document, you can decide if the POA is currently effective, giving the POA to your agent effective immediately. You can also create a springing power of attorney, which becomes effective when a predetermined event occurs, such as becoming incapacitated.
How Can You Avoid Abuse?
Unfortunately, people who abuse their powers as power of attorney agents are common. An agent can change ownership of certain financial accounts. They can change beneficiary designations. An agent can transfer assets from your account to theirs. Depending on the language of your power of attorney, they can even make healthcare decisions that would go against your best interests.
The two best ways to avoid abuse are to work with a power of attorney lawyer and pick someone you trust to act as your agent or even name two agents. By working with your attorney, you can ensure you are protected by including the right language that can prevent abuse. Likewise, by having a trusted agent, or even two trusted agents, you can rest assured that your best interests are being executed.
Who Should You Choose as Your Agent?
Picking someone who can make serious decisions for you is important. It is common to choose your spouse to act as your agent. You can also select a trusted sibling or one of your children to act as your agent. It may be less common, but you can even name your parent or grandparent to act as your agent, though you should consider their age and health now and in the future, as you should with any agent you choose. If you are worried about someone abusing their authority as your agent, you may also choose two agents. This way, you have two people keeping an eye on your assets and each other.
What Is Required of Your POA?
There are a few factors that must be met when creating your power of attorney. When creating your power of attorney, generally speaking, the following requirements must be met:
- Your POA is in writing
- The POA must be dated, and if it expires, it must include the expiration date
- Your agent must be named, along with a description of the authority you are granting them
- Your POA must be signed, usually in front of a witness, and notarized
Why Do You Need a Power of Attorney Lawyer?
Consider a POA to be a form of preventative maintenance. It allows people you trust to make important decisions for you should you be in a position where you cannot make those decisions on your own.
When you are creating a document that gives someone so much authority over you and your life, you want to make sure that the risks of abuse are minimal and that your wishes are being heard. How do you do this? Sure, naming someone you deeply trust is the best first step, but sometimes people surprise you.
The best way to ensure that your interests are looked after even if you are incapacitated is by working with the law firm of Ashwell & Ashwell, PLLC. Our experienced team can help you come up with a power of attorney that ensures you are being heard even when you can’t speak for yourself.
Our team will look at your unique situation, work with you and your family, and come up with a power of attorney that protects you and makes sure decisions are made with your best interests in mind.
Call 540-386-1277 to speak with our team. We will make sure you are happy and protected by your new POA!
