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Do I need a lawyer to prepare a
Power of Attorney?
No. You're not required to hire
a lawyer.
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How many copies of a
Power of Attorney should I sign?
You are required to sign (execute) only one copy. However, it is not
unusual for a Principal to sign several original copies. Some banks
and brokerage companies have their own durable power of attorney forms.
If you want your attorney-in-fact to have an easy time with these
institutions, you may need to prepare two (or more) durable powers of
attorney: your own form and forms provided by the institutions with which
you do business.
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How do I select an Agent for a
Power of Attorney?
You should choose a trusted family member, a proven friend, or a
professional with an outstanding reputation for honesty. Remember,
signing a Power of Attorney that grants broad authority to an Agent
is very much like signing a blank check.
Certainly, you should never give a Power of Attorney to someone
you do not trust fully. And do not allow anyone to force you into signing
a Power of Attorney.
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What's a Power of Attorney?
A Power of Attorney is a legal instrument that is used to delegate legal
authority to another. The person who signs a Power of Attorney is called
the Principal. The Power of Attorney gives legal authority to another
person (called an Agent or Attorney-in-Fact) to make property, financial
and other legal decisions for the Principal. The word attorney here
means anyone authorized to act on anothers behalf. Its not restricted
to lawyers.
A Principal can give an Agent broad legal authority, or very limited
authority. The Power of Attorney is frequently used to help in the event
of a Principal's illness or disability, or in legal transactions where
the Principal cannot be present to sign necessary legal documents.
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Are there different types of
powers of attorney?
Yes. There are "Nondurable," "Durable," and "Springing" Power of Attorney.
A "Nondurable" Power of Attorney takes effect immediately. It remains in
effect until the Principal revokes it, or until the Principal becomes
mentally incompetent or dies. A "Nondurable" Power of Attorney is often
used for a specific transaction, like the closing on the sale of residence,
or the handling of the Principal's financial affairs while the Principal
is traveling outside of the country.
A "Durable" Power of Attorney enables the Agent to act for the Principal
even after the Principal is not mentally competent or physically able to
make decisions. The "Durable" Power of Attorney may be used immediately,
and is effective until it is revoked by the Principal, or until the
Principal's death. If you don't specify that you want your power of
attorney to be durable, it will automatically end if you later become
incapacitated.
A "Springing" Power of Attorney becomes effective at a future time
designated in advance by the Power of Attorney, such as the illness or
disability of the Principal. You can specify that the durable power of
attorney does not go into effect unless a doctor certifies that you have
become incapacitated. A "Springing" Power of Attorney remains in effect
until the Principal's death, or until revoked by a court.
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What kinds of legal authority
can be granted with a Power of Attorney?
Whether "Nondurable," "Durable," or "Springing," a Power of Attorney
can be used to grant any, or all, of the following legal powers to an
Agent:
- Buy, sell, maintain, pay taxes on
and mortgage real estate.
- Manage your property.
- Conduct your banking transactions.
- Invest, or not invest, your money i
n stocks, bonds and mutual funds.
- Make legal claims and conduct
litigation.
- Attend to tax and retirement matters.
- Make gifts on your behalf.
- Use your assets to pay your everyday
expenses and those of your family.
- Buy and sell insurance policies
and annuities for you.
- Claim property you inherit or are otherwise entitled to.
- Collect benefits from Social Security,
Medicare or other government programs or civil or military service.
- Operate your small business.
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I have a living trust. Do I still
need a durable power of attorney for finances?
A revocable living trust can be useful if you become incapable of taking
care of your financial affairs. The person who will distribute trust
property after your death (the successor trustee) can also, in most cases,
take over management of the trust property if you become incapacitated.
Few people, however, transfer all their property to a living trust, and
the successor trustee has no authority over property that the trust doesn't
own. So a living trust isn't a complete substitute for a durable power of
attorney for finances.
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Can I appoint more than one
Agent in a Power of Attorney?
Yes. You may appoint multiple Agents. If you appoint two or more Agents,
you must decide whether they must act together in making decisions
involving your affairs, or whether each can act separately.
Consider the advantages and disadvantages to both forms of appointment.
Requiring your Agents to act jointly can safeguard the soundness of their
decisions. On the other hand, requiring agreement can delay action, or one
may be unavailable to sign. If your Agents are allowed to act separately,
one will usually be available to act for you, but there may be confusion
and disagreements if the Agents do not communicate with one another, or if
one of them believes that the other is not acting in your best interests.
It is generally a good idea to appoint a substitute Agent.
Powers of Attorney are only as good as the Agents who are appointed.
Appointing a trustworthy person as an Agent is critical. Without a
trustworthy Agent, a Power of Attorney becomes a dangerous legal
instrument, and a threat to the Principal's best interests.
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Is it possible for an
Agent to steal my money and property?
Yes. A Power of Attorney can be abused, and dishonest
Agents have used Powers of Attorney to transfer the Principal's assets
to themselves and others. That is why it is so important to appoint an
Agent who is completely trustworthy, and to require the Agent to provide
complete and periodic accountings to you or to a third party.
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Can a transfer of a
Principal's assets to other people be a good thing?
Yes. A Principal may want to authorize transfers or gifts
property for estate planning and other valid purposes. Powers of Attorney
forms in many states permit Agents to make gifts to members of the
Principal's family, if the Principal so authorizes in the Power of
Attorney. The Principal can also customize a Power of Attorney to permit
the Agent to make gifts to non-family members.
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Can a Power of Attorney
grant an Agent the authority to make medical decisions for the
Principal?
No. In some states, the proper legal instrument for delegating
health-care decisions to another is called a Health Care Proxy.
Neither in most states does a durable power of attorney for finances
give your agent legal authority to make medical decisions.
In most states, youll also want to write out your wishes in a
living will, which will tell your doctors your preferences about
certain kinds of medical treatment and life-sustaining procedures if
you cant communicate your wishes. If your living will is properly
prepared, your doctors are legally bound to respect your wishes.
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Once I sign a Power of Attorney,
may I continue to make legal and financial decisions for myself?
Yes. The Agent named in a Power of Attorney is only your
representative. As long as you are capable to make decisions, you can
instruct your Agent to do only those things that you want done.
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When is it appropriate to
use a "Durable" or "Springing" Power of Attorney?
"Durable" and "Springing" Powers of Attorney are frequently used to
plan for a Principal's future incapacity or disability and loss of
competence resulting, for example, from Alzheimer's Disease or a
catastrophic accident. By appointing an Agent under a "Durable" or
"Springing" Power of Attorney, the Principal is setting up a procedure
for the management of his or her financial affairs in the event of
incompetence or disability.
A "Nondurable" Power of Attorney enables a Principal to decide in
advance who will make important financial and business decisions in
the future.
They are also helpful in avoiding the expense of having a court appoint
a Guardian to handle the Principal's affairs in the event of incompetence
or disability.
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Do I need to have my signature
witnessed on a Power of Attorney?
Yes. A Notary Public must witness your signature on the Power of
Attorney. In some states, witnesses must watch you sign the document.
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What are an Agent's
obligations to a Principal?
The Agent is obligated to act in the best interests of the Principal.
An Agent is a fiduciary, with strict standards of honesty and loyalty to
the Principal. An Agent must safeguard the Principal's property, and keep
it separate from the Agent's personal property. Money should be kept in a
separate bank account for the benefit of the Principal, and Agents must
also keep accurate financial records of their activities, and provide
complete and periodic accountings for all money and property coming into
their possession. Instruct your Agent to provide accurate records of all
transactions completed for you, and to give you periodic accountings.
You can also direct your Agent to provide an accounting to a third party -
a member of your family or trusted friend--in the event you are unable to
review the accounting yourself.
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Am I required to file a Power
of Attorney in a government office?
Not unless the Power of Attorney is used in a real estate transaction.
In that case, it must be filed in the County Clerk's office. And when you
file in the County Clerk's office, the Power of Attorney is a public record
open to inspection by the public. A writing that revokes a filed Power of
Attorney should also be filed in the County Clerk's office.
If you file a Power of Attorney in the County Clerk's office, you will
be able to get additional "certified" copies from the County Clerk for a
small fee. A certified copy is legally equivalent to the original document.
It is often convenient to have certified copies of your Power of Attorney
on hand.
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Who monitors the actions
of my Agent?
There is no official or government monitoring of Agents acting pursuant to
Power of Attorney. That is the responsibility of the Principal. It is
therefore important to insist that your Agent keep accurate records of all
transactions completed for you, and to provide you with periodic accountings.
You might also direct your Agent to give an accounting to a third party in
the event you are unable to review the accounting yourself.
Should a Principal, member of the Principal's family or a friend have
grounds to believe that an Agent is misusing a Power of Attorney,
the suspected abuse should be reported to the police or other law
enforcement authority to protect the Principal from the loss of his or
her property. Consider asking a lawyer for help and advice.
Please review our Lawyers
Network to find the appropriate lawyer in your area.
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What can I do if my Agent
does not follow my instructions?
You may revoke your Power of Attorney at any time, as long as you are
mentally competent.
You should inform your Agent, in writing, that you are revoking the
Power of Attorney. Request the return of all copies of your Power of
Attorney.
You should notify your bank or other financial institution where your
Agent has used the Power of Attorney that it has been revoked.
You should file a copy of the revocation with the County Clerk if your
Power of Attorney has been filed in the Clerk's office.
If you decide to revoke a Power of Attorney, it is probably in your best
interests to consult a lawyer, and arrange to have a new Power of Attorney
executed.
Please review our Lawyers
Network to find the appropriate lawyer in your area.
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