When it comes to estate planning, most people think that creating a will is the most important document available. However, many fail to consider the implications that come from establishing a durable power of attorney as part of your estate plan.
Specifically, a power of attorney (POA) is a legal document that grants an individual the authority to make decisions on your behalf if you were to ever become incapacitated. The agent is the party that receives power and will have the legal right to make decisions on your behalf for financial purposes.
Here are a few things you should consider before executing a POA.
Who should I appoint?
Because the role of an agent involves managing your financial affairs, you should definitely appoint someone you trust to act wisely in your best interests. For many, granting power of attorney to a spouse, sibling, adult child, or close friend, thus, makes most sense.
Sometimes, more than one person may be named to act as agent. However, doing so may cause the possibility for conflict if these individuals do not agree or are not all available to act when needed.
What authority would the POA grant?
A POA can be limited or general.
With a limited POA, the agent would be given the authority to conduct a specific act. This may include, for example, granting the agent the authority to sell an individual’s home, car, or other assets. It may also include specific authority to access one’s bank accounts.
A general POA, on the other hand, is more in-depth and provides the agent with various rights that you have yourself. This typically includes the authority to perform any legal act on behalf of the principal. Those specific tasks, however, must still be included in the legal document even if the intended power being granted is more generalized.
When would I need one?
Although most powers of attorney take effect upon execution, it is often assumed that the role of agent will not be used unless the principal – or person delegating power – becomes incapacitated. Phrasing in the legal document, however, can establish that such role only becomes effective unless such incapacity occurs.
For most, a POA is triggered when someone is elderly or if an individual has a serious, long-term health crisis.
But incapacity may not be the only reason someone might need a POA. Often, individuals in the military or people who work abroad will establish a POA to manage their affairs in the United States while they are overseas.
This is why it is important to clearly establish what conditions – whether or not related to incapacity – would trigger the POA-granting authority.
How to get a POA?
First, you should decide who you’d like to manage your affairs if you were unable to do so for yourself. Then decide when you’d like the POA to be established, whether it is upon execution of the legal document or upon incapacity, for example.
Since every state has laws that govern powers of attorney, it is important that you consult qualified attorneys like those at Mendez and Mendez Law. Doing so will ensure that your POA is drafted in an effective and valid manner, so that issues are avoided or minimized when the power is invoked.
In Florida, for example, a power of attorney must be signed by the principal and two witnesses, and must be notarized.
You should also keep in mind that for a POA to be legally binding, the grantor must have sufficient mental capacity when the document is executed. This suggests that the grantor must have a clear understanding of the document and its implications – including to whom the power of attorney is being granted and what property may be affected as a result.
Is a will a substitute for a POA?
No. A will is a document that establishes how you would like your assets to be distributed after you pass away. A POA, on the other hand, impacts decisions being made while you are alive. A POA ceases to exist or have validity after you pass away.
It is vital to consider establishing a POA for yourself, so that a trusted individual can make legal or financial decisions on your behalf if incapacity were to occur.
Executing a POA, however, should be done with proper legal counsel to ensure that the authority is properly invoked by your agent when needed.
Our team of expert attorneys at Mendez and Mendez Law is eager to discuss your situation and work with you to best serve your legal needs.