Power of Attorney
A power of attorney is a document that allows a trusted friend or family member to act on your behalf. This prevents the court from stepping in and making this decision for you in the event that you become incapacitated. The person who is authorizing the power of attorney is called the grantor, while the person who is authorized to act is known as the agent or the attorney-in-fact. A power of attorney becomes void if the grantor dies or if the attorney-in-fact is proven to be incapable of handling the affairs properly.
While a general power of attorney can allow the agent to make all private, business, and health care decisions, it is possible to create a limited power of attorney if you need someone to be responsible for just one matter, such as selling a house or buying a property.
One of the most important decisions involved in creating a power of attorney is appoint an agent. The agent will be acting on your behalf, so it is important that the individual is someone you trust and will not take advantage of you. Most people choose a friend or family member who is willing to serve as their agent, but a grantor can choose anyone they wish.
If you have dependents in your care, you can appoint a power of attorney for care and custody of children. This can bring great peace of mind as accidents cannot be foreseen. Appointing a power of attorney is a part of estate planning that can avoid putting the burden on the shoulders of your family and friends.
Establishing Power of Attorney
Because power of attorneys are under the jurisdiction of the state, the rules for creating a power of attorney varies from state to state. To make sure that your document includes all the necessary information, you should contact an estate planning lawyer in your state who can review it with you. While every state has different provisions, there is some basic information that every state requires.
You must first provide your contact info and social security number, as well as that of the agent you have selected. After this, you should describe the powers that you are transferring to the agent. Make sure that you detail how long the power of attorney will last. In this section, include if the agent will be provided with any compensation and any substitute agents in case the first agent is not available. You should then sign and date the document, along with your agent, and take it to get notarized.
Limited Power of Attorney
If you do not want to give someone a comprehensive power of attorney, then there are two main types of limited power of attorneys: healthcare power of attorney and financial power of attorney. A health care power of attorney is a document that gives an agent the responsibility of making your medical decisions.
If you are too sick to make decisions or communicated, then this individual can step in to act in your best interests. Your attorney-in-fact must follow your wishes while following the recommendations of your physician. All decisions should be generally accepted medical practice, unless you have otherwise specified.
A financial power of attorney is a document that gives someone permission to handle your finances when you become unable to do so. The power of attorney can go into effect whenever you specify, whether that is immediately or when a doctor declares that you are incapacitated.
To make sure that your power of attorney is valid, obtain counsel from an estate planning lawyer in your area. A knowledgeable legal representative will know the laws regarding power of attorney and can help you stay within the proper guidelines set out by the state. Note that you may change the provisions of the document at any time you wish.
Responsibilities of the Attorney-in-Fact
By law, your agent must act in your best interest as any other prudent person would do. The attorney-in-fact should avoid conflict of interests with your assets, such as combining bank accounts, or profiting from business transactions. As the agent manages your affairs, he or she should keep a detailed account of all the transactions. If a beneficiary or court should ask for the record, the agent is required to provide them with it. Failure to do so could result in loss of authority.
If you have given your agent the power to invest or buy and sell your property, then the court will hold them to the same standard as another reasonable person. If the agent's actions are found to be negligent, then that person could be liable to pay for any damages that you incurred. It is important to note that the courts will not keep strict watch over your agent's actions, as they would under a guardianship or conservatorship. If someone disputes the power of attorney or the agent's actions, then the courts will take a detailed look into your affairs. If you suspect an attorney-in-fact is not acting responsibly, then contact an estate planning lawyer to dispute that individual's actions. Whether the agent is acting on your behalf, or that of your loved one, you should make sure that the agent is brought to justice.