A Power of attorney is an important tool in estate planning. The recent article “Top Ten Facts About Powers of Attorney” from My Prime Time News, explains how a POA works, what it can and cannot do and how it helps families with loved ones who are incapacitated.
The agent’s authority to power of attorney (POA) is only effective while the person is living. It ends upon the death of the principal. At that point in time, the executor named in the last will or an administrator named by a court are the only persons legally permitted to act on behalf of the decent.
An incapacitated person may not sign a power of attorney.
Power of Attorney can be broad or narrow. A person may be granted POA to manage a single transaction, for example, the sale of a home. They may also be named POA to handle all of a person’s financial and legal affairs. In some states, such as Colorado and Florida, general language in a POA may not be enough to authorize certain transactions. A power of attorney should be drafted in consultation with an estate planning attorney. A general power of attorney can cause more problems than not having one at all.
You can have more than one agent to serve under your power of attorney. If you prefer that two people serve as POA, the POA documents will need to state that requirement.
Banks and financial institutions have not always been compliant with POAs. In some cases, they insist that only their POA forms may be used. This has created problems for many families over the years, when POAs were not created in a timely fashion.
In 2010, Colorado law set penalties for third parties (banks, etc.) that refused to honor current POAs without reasonable cause. A similar law was passed in New York State in 2009. Rules and requirements are different from state to state, so speak with a local estate planning attorney to ensure that your POA is valid.
Your power of attorney is effective immediately, once it is executed. A Springing POA becomes effective when the conditions specified in the POA are met. This often includes having a treating physician sign a document attesting to your being incapacitated. An estate planning attorney will be able to create a POA that best suits your situation.
If you anticipate needing a trust in the future, you may grant your agent the ability to create a trust in your power of attorney. The language must align with your state’s laws to achieve this.
Your agent is charged with reporting any financial abuse and taking appropriate action to safeguard your best interests. If your agent fails to notify you of abuse or take actions to stop the abuser, they may be liable for reasonably foreseeable damages that could have been avoided.
The agent must never use your property to benefit himself, unless given authority to do so. This gets sticky, if you own property together. You may need additional documents to ensure that the proper authority is granted, if your power of attorney and you are in business together, for example.
Every situation is different, and every state’s laws and requirements are different. It will be worthwhile to meet with an estate planning attorney to ensure that the documents created will be valid and to perform as desired.
If you would like to discuss your legacy options with an estate planning attorney in Jupiter, Palm Beach Gardens, or Naples, Florida, schedule a complimentary call with Edward J. Welch at Welch Law, PLLC. At Welch Law, WE WANT TO DRAFT YOUR LEGACY!
Reference: My Prime-Time News (April 10, 2021) “Top Ten Facts About Powers of Attorney”
