What is a Power of Attorney?
A Power of Attorney is a document authorizing someone else (your agent) to act on your behalf. The purpose of giving someone this power is to enable the agent to act on your behalf when you cannot act for yourself.
Who may act as an agent under a Power of Attorney?
In general, an agent may be anyone who is legally competent and over the age of 18. Usually, it is a family member such as a spouse or a child. More than one person can be named as an agent. However, sometimes naming two or more individuals to act together can prove inconvenient, particularly if a power of attorney must be exercised promptly. Generally, a better course is to name one individual as agent and then another as a backup.
What is the difference between a General and a Limited Power of Attorney?
A General Power of Attorney authorizes your agent to do almost everything on your behalf which you could do for yourself. A Limited Power of Attorney authorizes your agent to perform only certain acts specifically listed in the document.
How does an agent use a Power of Attorney?
Your agent presents the power to the other party involved in the transaction and signs any necessary documents needed for such transactions on your behalf. Your agent normally signs your name and adds thereafter “by [Agent's Name] his/her Attorney in Fact”.
When does a Power of Attorney become effective?
This depends upon what the power says. It can be made effective at the time of signing or it can become effective at the time of your incapacity.
How does a Power of Attorney terminate?
Death revokes a Power of Attorney. You may also cancel your Power of Attorney by signing a revocation. The best way to revoke a Power of Attorney is to destroy all copies. If the power is a non-durable Power of Attorney, it will terminate upon your incapacity, while a Durable Power of Attorney survives your incapacity.
Under a Power of Attorney, can my agent make a gift on my behalf?
Yes, but only if your Power of Attorney specifically authorizes your agent to make gifts from your assets.
Must third parties honor a Power of Attorney?
Yes. A third party is generally required to accord the agent acting under a valid Power of Attorney the same rights and privileges as would be accorded the principal if he/she were personally present. Many banks, however, will require you to complete their own forms to authorize your agent to write checks on your account, so it is advisable to inquire as to whether your banking institution requires such forms that can be completed in conjunction with executing a power of attorney. In addition, the IRS generally will not honor any Power of Attorney that does not specify the tax matter and the tax year at issue.
What makes a Durable Power of Attorney durable?
A Durable Power of Attorney remains effective even if you become incapacitated. Generally, unless the power specifically indicates it is durable, it is not durable and will terminate upon your incapacity.
Should I have a Durable Power of Attorney?
Absolutely! The Durable Power of Attorney for property is often used in conjunction with a trust to enable your agent to transfer your assets into your trust or to manage assets not placed in your trust, such as retirement accounts, in the event you become disabled.
Should I have a Durable Power of Attorney for Health Care?
Yes, it is important to have a Durable Power of Attorney for Health Care. It allows your agent to make a number of health care decisions on your behalf. Often, this is accompanied with a Living Will that can cover the issue of remaining on life support systems under varying circumstances.
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