Thursday, February 12, 2015

Back to Basics: Financial Power of Attorney

Lynn A. Dean
Estate Planning Attorney
There are two different kinds of powers of attorney. One is for financial matters, and the other is for health care decisions. The financial power of attorney is called a General Power of Attorney, or may be titled "Statutory Power of Attorney." This power of attorney may allow the agent (also called an attorney-in-fact) to sign documents, withdraw funds from a bank account, sell real estate, create a trust, and gift assets belonging to the principal (you). The powers of the agent are specified in the power of attorney.  

If the power of attorney is a "springing" power of attorney, it cannot be used unless you are mentally incapacitated. The power of attorney will state what is required before it can be used. For example, it might say that in order to use this power of attorney, the agent must have letters from two doctors stating that the principal (you) is no longer able to manage their own personal and financial affairs.  

If the power of attorney is not a springing power, then it is typically good immediately, and can be used by the agent EVEN IF you are still able to make all of your own decisions. The general power of attorney terminates upon the death of the principal. 

The other power of attorney is called an Advance Health Care Directive. This document appoints a person (agent) to make health care decisions when the person is no longer able to make their own decisions. This agent is also allowed to make final arrangements for disposition of the person's body, and therefore continues even after that person has passed away.  

A person who is acting on behalf of another, using a power of attorney, is considered to be a fiduciary, and must act in the best interests of the principal. They are prohibited from using the power of attorney to benefit themselves, unless the power of attorney specifically allows them to do so. 

Triggers for obtaining or updating your power of attorney:
  1. Turning 18
  2. Marriage
  3. Divorce
  4. Birth
  5. Death
  6. Enlisting
  7. change in mobility or health
  8. Relocation
While issues involving the interdependence of legal, tax, financial, personal, family, and health concerns may be complex, The Law Office of Lynn A. Dean will make the process quick and easy. We have the experience and know-how to ensure all important facts regarding your estate are evaluated, and using this information, we create a customized plan that best protects your interests.

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