Generally, powers of attorney (POA) are very flexible documents that allow someone to give another person “power” over a certain task or tasks. These documented powers of attorney can be shaped in many ways. Some powers of attorney are for a one-time occurrence, others for all financial (or medical) matters.
What is a financial power of attorney?
Most often, the term financial power of attorney is referring to a full financial power of attorney, sometimes called a durable power of attorney or power of attorney for finances, a document that allows a person to transact personal business on someone else’s behalf.
Generally, a financial POA allows a person to allow another to “step into their shoes” to transact personal business. These documents are commonly part of larger estate plans.
Why do I need a financial power of attorney?
The most common need for a power of attorney is potential incapacity. If you are incapacitated and cannot pay your bills or deal with your personal affairs, you need someone to take care of those tasks to transact in your name. Allowing someone to deal with your personal affairs will ensure that these affairs are taken care of when you are not able to perform certain tasks.
This can also be limited, say, if you are having major surgery and there is a two-month recovery time in the hospital, you can limit the power of attorney for that time. These documents are very flexible and will allow your personal affairs to stay up to date if you are temporarily or permanently incapacitated.
I have a medical power of attorney, does that count?
Short answer, no. As mentioned above, powers of attorney are very flexible, so the documents tend to give very specific powers. Most often, a medical power of attorney only gives powers for medical, not financial decisions.
A medical power of attorney is a separate document that should be part of your estate plan.
When does a POA take effect?
This depends on your state and your document. Each state has different POA laws. In some states, it may be at the time of incapacity. In other states, it may be upon signing. Check your local laws to determine which it is, then make sure your document is tailored to begin at the time you want.
When does a POA end?
Generally, POAs run until the time of death. But once again, POAs can be limited to your specific needs and revoked at any time (as long as you are legally competent to revoke legal documents).
Should I have durable financial power of attorney?
If you have bills, finances, and responsibilities, yes. If you are temporarily or permanently incapacitated, this allows a person of your choosing to handle your finances and day-to-day personal business.
If you don’t have a power of attorney for finances, someone possibly will have to go to court to establish some sort of guardianship over you, which can be an expensive process.
A power of attorney is an important legal document that offers powerful protection for you. Because it grants so much authority to another person, it is important that you choose your agent, the powers they will be granted, and the details of your power of attorney very carefully.