How a Power of Attorney Works and Its Legal Implications
Have you ever wondered who would take care of your finances or make decisions for you if you were to become unable to do so for yourself? Don’t worry about leaving it up to whoever the law says has this right. Look into securing a power of attorney.
This legal document can allow you to prepare for any situation where you may need someone else to make decisions for you. With the help of an attorney, you can easily set one up and get a peace of mind today.
What Is a Power of Attorney?
The American Bar Association defines a power of attorney as a legally binding document that gives someone (or potentially multiple parties) the power to act on your behalf as a legal agent. You may create a power of attorney as temporary or permanent. With this document, your designated agent has the ability to manage your affairs without your written approval.
Why Would You Need a Power of Attorney?
One of the main reasons why you may want a POA is convenience. For example, if you would rather have someone be able to manage your assets without having to go through the additional hurdle of securing your approval each time, a POA can circumvent these checks and balance steps and allow someone to act on your behalf.
Another reason is in a situation where you are not able to make legally sound decisions. A POA provides you with security that a person of your choosing can do so for you. This is commonly seen with senior citizens. It’s also seen with people who have severe physical or mental conditions that prevent them from being able to make their own decisions.
Types of Power of Attorney
Not every POA grants the same powers to your agent. You can choose from different types of POAs to create the one that best suits your situation.
General Power of Attorney
A general POA grants an array of powers to the agent.
This can include:
- The ability to handle your financial matters and accounts
- The power to manage your insurance needs
- The ability to operate your business
- The ability to make business decisions on your behalf
- The power to hire or fire employees
- The ability to settle claims against you
- The ability to change your estate plan.
You may use this type of POA if you will be away for an extended period and need legal representation to handle your affairs during your absence or in a situation where you cannot make the decisions on your own due to an illness or injury.
Special Power of Attorney
A special POA is more specific in nature. You have the power to sign off on specific powers granted to your agent. For example, if you only want someone to be able to sign off on real estate deals, a special power of attorney would be the proper avenue. You may use a special POA when you don’t have the time to deal with specific affairs due to time or health constraints.
Health Care Power of Attorney
This type of POA grants your agent the right to make all medical decisions on your behalf. It comes in handy when you are not conscious or are otherwise unable to make decisions regarding your health care. While there are different state laws regarding this matter, your health care POA could have the ability to make serious decisions, such as ending life support.
You may use a health care POA if you are elderly or sick. You might find yourself in a situation where you can’t make decisions on your own. The power of attorney can be transferred to your child or someone you trust so that care can continue to be administered in your best interests.
Durable Power of Attorney
A durable power of attorney enables the agent to remain in control of the specified functions even if a court renders you mentally incapacitated or unfit. DPOAs are useful if you anticipate losing your mental faculties, such as if you have had an Alzheimer’s diagnosis. It acts as a preventative safeguard.
Choosing an Agent
Whoever you choose as your agent should be someone you trust. Many people choose a family member. Your family members usually have your best interests in mind and are close in terms of your relationship. However, you can select any individual to be your POA. Keep in mind that whoever you choose will be in charge of managing your affairs and should be someone who will honor your wishes.
Appointing Multiple Agents
As principal, you have the right to appoint multiple agents. You must decide whether these agents must act jointly or whether they can make separate decisions. Having multiple agents establishes a system of checks and balances. This keeps one agent from making too rash of a decision. However, it can also lead to discrepancies in decision-making that cause delays.
At the very least, it is important to have a backup POA in case something happens to your primary. A successor agent can take control once the primary agent either passes away or is unable to carry out the duties of an agent.
Revoking a Power of Attorney
You have the right to revoke your power of attorney at any time. Just as long as you are of sound mind to do so. You will need to put your revocation in writing and file it with the same place that handled your original POA paperwork.
Another party may also try to revoke your POA. Although, that becomes a much more complex legal proceeding and would be difficult to prove in court. The person would have to show the agent has done something to jeopardizes your interests.
Using a POA to Protect your Interests
You can insert provisions into your POA agreement that force your agent to report to an outside party regularly regarding your affairs. An example of an outside party would be the family accountant or a designated medical doctor. This adds another layer of security and guarantees that at least one other party can review decisions to determine if they align with your best interests.
Do I Need a Lawyer to File POA?
Not necessarily. Though it is a smart move to consult with a lawyer who specializes in trust or estate issues as he or she can help you determine the best course of action. POA paperwork can be complicated, so having a dedicated legal professional can be helpful during the filing process. A lawyer can also help you add provisions that safeguard your interests in the event you cannot look out for yourself.
Work with an Experienced Local Lawyer
If you want to create a power of attorney, then you should begin by speaking with an attorney.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!