Power of Attorney
Through the durable financial power of attorney, you can appoint anyone you trust to manage your finances when you are unable to make decisions yourself. It is an easy legal document to draft in preparation for emergencies. Without this financial power of attorney, such decisions will have to be taken to court, which is not a favorable outcome for those involved.
Appointing an Agent
First and foremost, you should decide on who you would want to appoint as your agent or “attorney-in-fact”. When making this decision, you should consider those who you believe to be reliable and trustworthy. After all, they are handling all of your finances. This person should be able to handle making decisions under pressure when emergencies occur. It is also good to consider what some of the roles your agent will be responsible for when deciding on who to appoint. You are allowed to give your agent the power to manage all of your finances. However, you can also set a limit to the amount of power they can have. Some of the powers they may have are using your assets, whether they are from your bank account, trust funds, or properties, to pay for your or your family’s daily expenses. For example, one of your family members gets into an accident or your child has a payment due for college tuition. Your agent will have the power to pay for these expenses. Essentially, your agent will act in your best interest to help pay for any costs that you or your family incurred after you have been incapacitated.
When it Becomes Effective
The financial power of attorney takes into effect immediately once signed. Commonly, spouses have financial powers of attorney that are active for each other to prepare for emergencies. This means that if something happens to one spouse, the other spouse would have financial control of the situation. When one passes away, the power of attorney automatically ends. Once this happens, your agent will have no authority over your assets and this is when your will or trust takes into effect. Another way that power of attorney can be terminated is if you suddenly recover from an illness and are mentally competent. For those who have power of attorney assigned for their spouses, the document ends if you get a divorce. This means that your ex-spouse will have no power over your assets if you become incapacitated.
Springing Power of Attorney
“Springing” power of attorney, as the name suggests, “springs” into action when you have become incapacitated. This means that springing power of attorney becomes effective only at specific point stated in the document. Most often, people specify that the power of attorney becomes effective the moment they become incapacitated. So, when signing the document, you would still have power over your assets. The main difference between springing and durable is that in springing power of attorney, you specify a point in time when the document becomes effective.
Issues With Springing Power of Attorney
However, there are some downsides in drafting a springing power of attorney instead of a durable power of attorney. Say you specify that the document becomes effective once you have become incapacitated. However, the problem arises when it comes to incapacity. Who is to determine and define when you are incapacitated? Certainly, you may request a doctor to verify that you have reached a state that you are unable to think for yourself. However, there may be a significant delay in the transition of powers. The process can take up to days or weeks to verify that you are truly incapacitated. This means that your finances are not being handled during this time and would lead to complications. Furthermore, it will be a heavy burden on the doctors to verify your well-being with the fear of violating medical and legal standards. The main purpose of power of attorney is to have a fast and efficient way to give the power to your agent without any delay of power. Springing power of attorney would delay the purpose of such a document. However, if you would have drafted a durable power of attorney, you would not have problems with delay. The control of your assets would be transferred to the agent smoothly.
Revoking Power of Attorney
There are several instances in which an individual, legally referred to as the principal, may change their mind about the person to whom they’ve delegated the Power of Attorney, or the agent. One instance involves the agent being unable to fulfill their legal duties due to a lack of capacity, or even a loss of interest in bearing the responsibilities. Other reasons for revoking the POA may include the Principal believing that the Agent is not completing the requirements appropriately, the Power of Attorney no longer being desired, the Principal wanting to change Agents or if the responsibilities of the Agent have already been completed.
How to Revoke the POA
Revoking the Power of Attorney is usually executed in three steps. The first step involves obtaining the Power of Attorney Revocation document and completing it. The revocation should include the principal’s name, the agent’s name, the date the Power of Attorney took effect, and the date the Power of Attorney was revoked. The second step involves notarizing the document under the supervision of a legal witness. Lastly, a copy of the revocation should be sent to the current agent(s) via certified mail. This will provide proof to the principal that the form was received by the agents, making it a criminal act should the agent decide to further act on behalf of the principal. The revocation should include the principal’s name, the agent’s name, the date the Power of Attorney took effect, and the date the Power of Attorney was revoked. For the revocation to be legally valid, the document should be witnessed and signed by a notary. Copies of the revocation should be sent to the agent and any third parties, such as banks and insurance programs, that used the Power of Attorney. Additionally, the revocation should be sent to any agencies where the Power of Attorney was recorded such as the County Clerk or the Land Titles Office.
For more information, please contact estate planning attorney Inna Fershteyn:
Phone: (718) 333-2395
This post is made available by the lawyer for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this site you understand that there is no attorney client relationship between you and the lawyer. The post should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. ATTORNEY ADVERTISING