Financial powers of attorney allow another person (an agent) to transact business on your behalf, including withdrawing money from your banking account or selling property. While simple in concept, it can be easy to make mistakes when using standardized forms.
A written power of attorney (POA) must be signed and notarized by you (the principal). A financial institution can generally rely that a copy of a properly executed POA is valid. The rest of our blog will cover some questions to consider about the details, including scope, who to name as agent and how a POA terminates.
How much power do you want to transfer to an agent?
The scope of authority can be general or limited. You may only want to grant power of attorney to a spouse to sign closing documents on the sale of property. In other cases, it might make more sense to grant a child general authority to handle all your finances after moving to an assisted living apartment.
The document that you complete should clearly spell out the scope of authority that you are granting.
Who should you select to act as an agent?
Relying on one agent may be helpful to keep everything simple. On the other hand, you may want to select co-agents to allow several children to share the responsibility of paying bills and tracking finances.
Naming a successor agent can also be important when a primary agent is no longer able to act on your behalf.
Is it possible to terminate a POA?
There are several events that will automatically terminate a POA:
- You pass away or become incapacitated (if the POA is not durable)
- A POA is drafted to expire after a certain amount of time or after a stated purpose is accomplished (that closing on real estate is a good example)
- The agent dies, becomes incapacitated or resigns
It is also possible to terminate a POA or revoke an agent’s authority.
Ensuring that a POA properly expresses your wishes requires the review of a qualified attorney. Each situation is unique, so obtain legal counsel prior to finalizing a POA.