POWER OF ATTORNEY The following section deals with general concepts related to a Power of Attorney. You may read this section in its entirety or click on the section below to go directly to the topic of interest. What is a Power of Attorney?
When a person says "I'm the power of attorney", it is not an entirely accurate statement. A power of attorney is actually a paper document in which two different parties are named. The first party, or person, is called the "principal" who is the person signing or executing the power of attorney. In the power of attorney, the principal delegates authority to another person so that that other person can conduct business in the place of the principal (without the principal being there or signing documents). This other person to whom the power to transact the principal's business is given is called the "agent". Agents can be family members or friends, or they can be banks or other entities. Powers of Attorney can vary greatly in what powers are actually delegated to the agent, and when those powers can be used. Powers of Attorney can give another person power to write checks, sell stock or real estate, and make medical decisions. There are limited powers of attorney, and there are "Durable General Powers of Attorney". Powers of attorney can be limited in the time they are effective, limited in what powers are given, or both. Powers of attorney can be effective immediately, they can become effective at a later time, or they can become effective when the principal is unable to take care of him or her self. All powers granted to an agent stop upon the death of the principal. A principal can appoint a single agent, more than one agent, and successor agents in case one of the appointed agents cannot serve. All powers of attorney are not the same and you should consult with an attorney before signing a power for attorney to ensure you understand exactly what powers are being delegated to the agent. What is Limited Power of Attorney?
One common limited power of attorney is a power which gives another person the power to sign checks on a bank account. In many cases this is a form provided by the bank and gives another person the power to sign checks only on that specific account at that specific bank. A limited power of attorney for a bank account does not give the agent power over any other matter of the principal's business except the account or accounts at that particular bank. Another common limited power of attorney is one given for the purpose of settlement on a house. Click here for an example of a limited power of attorney. What is a General Power of Attorney?
A common durable general power of attorney will give the agent broad powers to conduct the business of the principal. A Durable General Power of Attorney will often be considered for elderly clients so that if the elderly person has a stroke, Alzheimer's disease, or some other debilitating medical event, another person can step in and pay the bills, sell a house, sell stock, deal with retirement accounts, pension benefits and do whatever else may need to be done. Even younger people can become incapacitated and should have a power of attorney.
Click here for an example of a Durable General Power of Attorney. A power of attorney is a very powerful document that can give another person control of a principal's bank accounts, real estate, retirement accounts, life insurance policies and anything else that person owns. As a result, the principal should trust the person they appoint as their agent. There are some agents, unfortunately, who have misused the power given to them to steal money from the principal. As a result, the principal should only appoint a person as their agent if they can trust that agent with their money. Frequently asked Questions Q. If a person is named as executor in the will, does the executor have power of attorney?
A. No. The will only becomes effective after the death of the person who made the will. Only after a will has been admitted to probate does the executor have the power to do anything with the assets of the deceased. Q. Can I write checks to pay the funeral expenses as power of attorney when the owner of the account is deceased?
A. The power of attorney ceases upon death and in most cases you are required by law to go through the probate process in order to access the money in an account titled solely in the name of the deceased. Q. I have been given power of attorney by my parent and it still seems difficult, if not impossible, to use the power of attorney. Why is it so difficult to use the power of attorney?
A. Powers of attorney can be revoked and the principal may have passed away. Banks and other institutions are concerned that a power of attorney could be used inappropriately such as after it has been revoked, or after the principal had died. As a result banks often require that the power of attorney be reviewed by their lawyers and, even then, require that you provide assurances in the form of an affidavit that the power of attorney has not been revoked and/or that the principal is still living. Sometimes a bank or other institution will want a "certified copy" of the power of attorney. In these circumstances you will need the assistance of an attorney so that you can actually use the power of attorney. Q. Will a power of attorney signed when the principal lived in one state still work if the principal moves to another state.
A. Yes and No. Generally a power of attorney made in one state will be honored when that person moves to another state. In some states there are specific provisions that must be stated in the power of attorney. In those states the banks and other institutions are accustomed to seeing those provisions and if they do not they may tell you they do not recognize the power of attorney as valid. However, with a little effort, you can get a different answer. If possible, it is always better to get a new power of attorney when a person moves to another state. This information is not intended to provide legal advice and you should consult an attorney prior to acting on any information contained within. |
