POWERS OF ATTORNEY
What is a Power of Attorney?
A Power of Attorney is a document that allows an individual (the “principal”) to appoint someone as his/her “attorney-in-fact” to handle the principal’s property, finances, and other transactions. As the principal, you are able to determine how much power the attorney-in-fact will have over your affairs, and whether that person will also have the power to conduct your business affairs. You may want to use a Power of Attorney to plan for a time when you are unwilling or unable to make those decisions yourself. Having a Power of Attorney and appointing an attorney-in-fact does not restrict you from making your own decisions, but instead shares these responsibilities with your attorney-in-fact. A Power of Attorney is a very important estate planning tool.
What Authority Can You Give Your Attorney-In-Fact?
The principal can grant his/her attorney-in-fact the authority over the following transactions:
- Real property transactions;
- Tangible personal property transactions;
- Bond, share, and commodity transactions;
- Banking transactions;
- Business operating transactions;
- Insurance transactions;
- Beneficiary transactions;
- Gift transactions;
- Fiduciary transactions;
- Claims and litigations;
- Family maintenance;
- Benefits from military service;
- Records, reports, and statements; and
- All other matters.
You can limit your attorney-in-fact’s authority to act to any of the above types of transactions.
Naming an individual as an attorney-in-fact does not create an affirmative duty for that person to exercise any of his/her powers. However, if the attorney-in-fact exercises any of those powers, he/she must do so in the same manner as an ordinarily prudent person of discretion and intelligence would exercise in the management of the person’s own affairs and must have your best interests in mind. This is also known as a fiduciary relationship. Additionally, the attorney-in-fact is personally liable to any person who is injured by an action taken in bad faith under the power of attorney.
How Long Does a Power of Attorney Last?
A Power of Attorney is effective immediately when it is signed, and how long it lasts depends on whether you choose to make it “durable.” A Power of Attorney is durable if it is not affected by the incapacity or incompetence of the principal. If you choose not to make the Power of Attorney durable, it will last up until you become incompetent or incapacitated.
If the Power of Attorney is durable, it terminates on the earliest to occur of:
- Your death;
- The expiration of a date of termination specified by you in the Power of Attorney; or
- In the case of a Power of Attorney to your spouse, upon the commencement of proceedings for dissolution, separation, or annulment of the principal’s marriage.
A Power of Attorney can be revoked by the principal at any time. It must be revoked by a written instrument signed by you (and notarized in certain cases).
Can’t my Spouse Already Act on my Behalf?
Not necessarily. Even if a married couple owns all property jointly (giving them both access to all of their property), a Power of Attorney authorizes transactions broader than ownership of assets. For example, the Power of Attorney can enable your spouse to access insurance information, employee benefit information, credit card information, etc.
Should I have a Power of Attorney?
You should consult with an attorney to determine whether a Power of Attorney makes sense in your particular situation. You may want to use a Power of Attorney if you are unable or unwilling to handle your financial affairs yourself. You may also use a Power of Attorney to allow another individual to take care of your responsibilities at the time you become incapacitated. In most cases, because of the versatility of a Power of Attorney and the limits that can be placed on the attorney-in-fact, it is advisable to use a Power of Attorney to appoint an attorney-in-fact. Contact Sanford, Pierson, Thone & Strean today for a free consultation concerning a Power of Attorney.