A power of attorney form is a legal form that will allow someone to appoint another person to legally act on his or her behalf. The person who creates the POA (power of attorney) is called the principal and the person appointed to act on the principal’s behalf is called the agent.
One need a POA fills for many people is their need to help their aging parents with their financial affairs. Aging is a process we all have to go through but it can be made a much easier process with a POA. When we become physically or mentally debilitated to a point where we don't want or can't handle our finances it's nice to be able to appoint a trusted child or family member as our agent. With a 'durable power of attorney' we can give them the power to withdraw money from our bank account to pay bills and manage funds even when we become mentally or physically incapacitated. A general POA is no longer effective when the principal is incapacitated, that's why they created the durable POA and it's now recognized in all fifty states.
Some people only realize they need a durable POA during a sudden crisis, but most people draw one up along with an estate plan. Most lawyers, including Julian S. Bush, a senior estate partner with Shea & Gould, recommend everyone aged 60 or older should create a durable power of attorney because "that is the danger zone". He went on to say that it's equally advisable for younger clients but he has noticed they tend to resist the idea of sharing power over their assets.
There are many different types of POA forms but all of them are revocable. At any time you can revoke a POA with a 'revocation of power of attorney'. A limited power of attorney is used when someone wants to appoint an agent for a given time period or for a specific task. A limited POA is usually used for things like real estate transactions or when someone needs theirs finances handled while their traveling abroad.
A general power of attorney authorizes an agent to act in all of the principals business or financial affairs. However, when the agent becomes incapacitated, mentally or physically, the powers granted to the agent are automatically revoked. Unfortunately, this is usually the time when a power of attorney is needed most.
Some states, like New Jersey, have laws that allow the use of a 'springing' POA. Other states, like New York and Connecticut, don't allow their locals to use a springing POA. They call them springing power of attorney because they 'spring' into action when the principal becomes incapacitated. Sometimes they present problems though because the hospital may demand things like a court order then the court may demand direct evidence of the incapacity, such as a signed letter from the doctor. That's why most lawyers, like David P. Callahan, a lawyer with Whitman & Ransom, say instead of a springing POA use a durable POA because "The durable power confers immediate authority’, then goes on to say ‘it shall survive incapacity."
Another use power of attorney are fulfilling is the ability to allow the agent to make decisions about the extent and nature of the principal's medical treatment. Some people create a separate document for this, while others add them to the regular power of attorney in their estate plan along with other special provisions; which might include giving the agent the power to sign tax returns or access a safe deposit box.
Disclaimer: This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as legal advice or used to make legal decisions. Consult an attorney in your area if you’re seeking legal advice. |
