What Is a Power of Attorney – A power of attorney allows you to appoint someone to act in your place for financial or other purposes if you ever become incapacitated.
This document specifies what powers someone has. It may include the power to open bank accounts, withdraw funds, trade stocks, pay bills, and cash checks.
If you become incapacitated without a power of attorney, the court will have to appoint a guardian or conservator. That process will take time and money.
There are four main types of powers of attorney
For most people, this is the most important document, even more, useful than a will. Without one, no one can represent you unless a court appoints a conservator or guardian.
The Court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take steps that could be implemented immediately under a simple durable power of attorney.
It also may be limited or general. A limited power of attorney may give someone the right to sign a deed when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives them the powers and rights that you have yourself.
A power of attorney may also be either current or “springing”. Most powers of attorney take effect immediately, even if the understanding is that they will not be used.
However, the document can also be written so that it does not become effective until such incapacity occurs. It is important that the standard for determining incapacity be clearly laid out in the document itself.
Take extra steps
Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid any problem.
While you should consider a “durable” if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship.
In that case, you may execute a “limited-durable” nominating a person you want. Most states require the court to respect your nomination “except for good cause or disqualification.”
Please always consult with an attorney before giving someone your Power of Attorney!