Many people have heard of the Power of Attorney document but few truly understand what this legal documentation is or what it can do. A general power of attorney gives broad powers to a person or organization (known as an agent or attorney-in-fact) to act in your behalf. These powers include handling financial and business transactions, buying life insurance, settling claims, operating business interests, making gifts, and employing professional help. General power of attorney is an effective tool if you will be out of the country and need someone to handle certain matters, or when you are physically or mentally incapable of managing your affairs. You can specify exactly what powers an agent may exercise by signing a special power of attorney. This is often used when one cannot handle certain affairs due to other commitments or health reasons. Selling property, managing real estate, collecting debts, and handling business transactions are some of the common matters specified in a special power of attorney document.
Here are ten important things you must remember:
- They are powerful.
Most people do not fully understand what a power of attorney can do and even fewer comprehend that a power of attorney is far reaching. This is one of the most powerful and binding legal documents that we have. It can give another person (or persons) the ability to act on your behalf with regard to all financial and medical matters. The individuals you list as having power of attorney over you can control almost every aspect of your life.
- There are many different types.
Not all power of attorney papers are the same. Some can be written to focus on a particular time period while others can be drafted to cover only certain areas like health and medical care. It is important to understand what you are trying to accomplish with a power of attorney and then make certain that your document is one that meets your wants and needs and fits your unique situation. Your attorney can assist you with this.
- Appoint someone you trust.
Though this should be common sense, it is something that can’t be overstated. You are appointing someone to make all of your business, financial, and medical decisions for you in the event you are unable to do so. You must trust them and not be worried about alterior motives or taking advantage of you at some point. Most people choose a family member to be given power of attorney but anyone can be listed in the documents.
- Don’t assign too many people.
Parents with children may want to have them all listed for power of attorney and at first this may seem like a good idea. Many people think multiple people with the power will mean there are more people who can make decisions. However, this also means more opportunity for conflict and it can also mean all listed people with power of attorney will need to sign and be present and sign for important decisions which can be difficult too.
- You can’t undo what they did.
If you find out down the road that someone you listed as your power of attorney abused that position and has taken money from you, it may be next to impossible to get that back from then since they legally had the power to do so. This is why it is vitally important to appoint someone you trust. You must act quickly to remove someone from your power of attorney documentation so they no longer have the ability to abuse that power.
- You still have power to act.
Appointing someone to have power of attorney does not in any way prevent you from acting on your own behalf. If you are fully able to make your own decisions and you must remember that it is your right to do so. A power of attorney simply gives legal authorization for someone else to also act on your behalf and to make decisions for you in certain special situations where you are unable to do so for yourself.
- They are fully revocable.
a POA can always able to be revoked or amended. So long as you are deemed to be of sound mind you can work with your attorney to remove people form the authorization and to amend the reach and terms of the power of attorney documentation at any time. If you do not believe that the document is in keeping with your wishes, or that someone is abusing his or her powers and authority then you must contact your lawyer right away.
- They do not negate a will.
One of the most common fears people have when they think about setting up a power of attorney is that if they already have a last will in place, who has the final say in the processes outlined in the will? The Will controls who acts on behalf of your estate when you die. This person does not have any authority to act until you have passed away and a power of attorney is good only when you are alive but unable to make calls on your own.
- They cease at death.
As mentioned above, someone who hold a power of attorney loses all authority at the moment of your death. Someone who continues to act with the power given to them in a power of attorney after the person has died does so at risk of facing legal repercussions. They are technically breaking the law as the legal binding of the power of attorney is dissolved and is no longer in effect in any way, shape, or form.
- Be careful.
This warning is two-fold. First, be very careful about who you are choosing to be listed as having power of attorney over you in the documentation so you can avoid potential problems down the road. Second, if you are appointed as POA over someone else be sure you read the documentation carefully and fully understand the limitations of your power and authorization. Talk to your attorney to make sure everything is in order.
Needing a power of attorney is “almost as certain as death and taxes” in everyone’s life. Illness, injury, old age, or daily life commitments happen to everyone. It is important to understand what a power of attorney is and how it can assist in taking care of business, even when you can’t.