A power of attorney is a legal document that comes in pretty handy when you want to give someone the authority to make decisions and crucial choices on your behalf.
The person who creates the power of attorney is called the principal or the grantor because they grant somebody else the last word instead of them. The one they give this authorization is popular as their attorney-in-fact, agent, or proxy.
Understanding Power of Attorney Roles
Power of attorney, or POA, is often used in case of a grantor’s permanent or temporary disability, or when the grantor isn’t able to come and sign some vital documents. Before you decide to use this type of document, you should understand its role perfectly.
Besides the fact that it brings many benefits, you need to learn that it can also end, but only under certain circumstances. For example, power of attorney will become invalid when the grantor dies or revokes the agreement, when a court cancels it, or when the attorney-in-fact can no longer bear with the duties outlined. When it comes to married couples, the arrangement may be annulled if the proxy and the grantor divorce.
Before you decide to use this legal document, you should know that there are 5 types of POAs: durable, springing, general, financial, and medical power of attorneys.
Durable vs Non-Durable Power of Attorney
The durable and non-durable power of attorneys are equally good, but they cover different situations. Having a durable power of attorney means that your proxy’s authority to bring decisions on your behalf doesn’t stop if you get ill or become incapacitated. So, in case you have an accident or fall into a coma, the person you have granted the authority to have the last word instead of you, is still valid.
When you use your power of attorney for real estate planning, you should choose a durable POA, because it is the best option when you make long-term plans for a condition where you may not be in a position to make decisions by yourself. Courts typically accept that one power of attorney is durable except if you point out that you don’t want it to be durable. However, it’s of utter importance for you to state if the POA is durable or non-durable.
A non-durable power of attorney doesn’t obligate your proxy to make choices for you in case you become disabled. So, your proxy’s privilege to bring a decision ends the second you become ill or incapacitated. This type of POAs doesn’t work the best for estate planning, but it is exceedingly practical in other scenarios. You can use this form if you want to grant your broker to manage your funds day-to-day.
Springing vs Immediate Power of Attorney
Once you create a traditional power of attorney, it becomes effective upon you, as a grantor, to sign it. The fact that the proxy may try its authorities right away, is what makes it so unique. This document is called an immediate POA and is advantageous for financial and business purposes.
A springing POA is different from the immediate one because your proxy will be able to act only if you aren’t able to do that. This form is typically used for estate planning. So, if you become disabled and can’t carry out on your own, the condition in the agreement is met, and your proxy’s authority “springs” into full effect. However, while you are still healthy and fit, your proxy has no legal power, and only you’re in control of your matters.
Considerations When Choosing an Attorney-in-Fact or Agent
You should be very careful when you are choosing an attorney-in-fact. This person will have the privilege of effecting decisions related to your finance, business, home, health, and property. So, always pick a person that you trust 100%. Another thing you should have in mind is that the one that you want to grant this authority needs to be a wise person that can’t be manipulated easily.
Think about getting in touch with each of the companies you work with and illustrate your plans. You can also contact your bank because banks have their documents that you and your attorney-in-fact need to complete before your agent can make any changes.
Choosing Which Powers to Grant
Plan the capabilities you would give to your agent, but also apply some restrictions in your document. You can give them permissions, but also certain limits in the areas, such as:
- Real estate: They can rent, sell, and buy an estate in your name, but you can restrict them to selling a particular property.
- Business: They can work with your company and bring decisions related to budgets, investment, and employment, but you can limit the number of employees they can hire.
- Finance: They can control all your financial accounts and investments, but you can restrict them you access some of your accounts, as well.
Making Your Power of Attorney Form Legal
To make your power of attorney form legal, you should sign the document following the law of your state. In most states, it includes signing the form in front of witnesses or notarizing it. You should also give a copy of the agreement to your proxy.
Sharing Your Wishes with Others
Your wishes are the most important, and you need to include them in your POA. You can share your desires with others because not all of your friends and family members can get a copy of the agreement you signed in with your agent.
So, it is always a good idea to tell other people you trust which permissions and restrictions your agent has been authorized with.
Amending or Revoking Your Power of Attorney
Until your agent authority is properly annulled, they can keep bringing decisions for the grantor. To amend a Power of Attorney, the grantor needs to create a Revocation of POA document, or create a perfectly new POA that points out that the previous POA is revoked.
Plan for Easy Management of Your Affairs During Incapacity
You can make a plan for easy management of your affairs if you become incapable of taking care of them, temporarily or permanently. You should talk with an experienced expert and include the rights as well as the limitations you give to your agent. You can hand them out the right to take care only of your business, but not your investments during the period you aren’t able to take care of them by yourself!
