A power of attorney is a legal document that allows someone else to act on your behalf.
Powers of attorney (POA) can be helpful to older people and others who want to choose a trusted person to act on their behalf when they cannot. You can plan ahead by creating a POA to appoint a substitute decision-maker, also called an agent.
Financial Power of Attorney
A financial power of attorney (POA) allows someone else to manage your financial affairs on your behalf when you are unable to do so. In this article, we will explore the definition and significance of a POA, the different types available, and the process of creating a financial POA by yourself. Once the principal has executed the power of attorney document, they provide the original to their appointed agent, who can present it as proof of their authority to act on the principal’s behalf when dealing with third parties.
A financial POA empowers agents to handle various financial tasks, such as making withdrawals from your bank account or signing documents on your behalf during real estate transactions. To ensure the smooth utilization of a financial POA, it is advisable for the principal to take the following steps:
- File the POA with relevant entities such as banks, lenders, and financial professionals well in advance of the agent’s need to work with them.
- Request confirmation from these organizations that they will recognize and honor the authority granted by the power of attorney.
- If any organization raises objections or refuses to acknowledge the agent’s authority, the principal should revise the POA according to their specifications and submit it again.
- Instruct the agent to present their copy of the POA when conducting financial transactions to invoke their powers.
The responsibilities of a POA agent can vary based on the powers granted in the POA document. The principal has the discretion to determine the extent of authority they wish to confer, and the agent should adhere to those specified powers. If the agent is no longer interested in serving as the principal’s representative, they can relinquish their authority by providing a written resignation letter.
While some individuals grant their agents complete authority over all financial matters, others limit the agent’s power to specific transactions, such as signing documents during a real estate closing. It is within the principal’s rights to decide which powers they want to grant and to whom. You can refer to our comprehensive list of traditional agent responsibilities for financial POAs below.
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Medical Power of Attorney
A power of attorney is a legally binding document that designates an individual as your representative, granting them the authority to act on your behalf. Various types of powers of attorney cater to different circumstances.
A medical power of attorney specifically allows you to designate someone, often referred to as your attorney-in-fact or agent, to make medical decisions on your behalf if you are unable to do so due to severe illness or incapacitation.
Unlike a regular power of attorney, which is typically non-durable and expires upon incapacitation, a medical power of attorney is always durable. It remains in effect even if you become incapacitated. This durability ensures that the designated agent’s authority comes into play only when you are unable to make decisions on your own.
You might think that having a medical power of attorney is unnecessary. For instance, you may already have a living will integrated into your estate plan, or you might have effectively communicated your healthcare preferences to your family and friends in the event of your incapacity.
However, if you harbor doubts about the significance of having a medical power of attorney, it is crucial to comprehend who will be responsible for making medical choices on your behalf should you become unable to do so.