Financial Power of Attorney

Financial powers of attorney are useful documents. My clients use these documents to appoint someone to manage their financial affairs. Typically, my clients ask me to draft a financial power of attorney that becomes effective when they become physically or mentally unable to manage their financial affairs. Sometimes a client wants a financial power of attorney that gives someone else authority to manage their finances immediately. This choice depends on my client's circumstances and comfort level with the person to whom my client plans to give financial authority. The day-to-day management of my clients' finances requires a hands-on time commitment. I advise my clients to use a financial power of attorney to address the possibility that their physical or mental incapacity will prevent them from managing their affairs. 

A power of attorney can grant numerous kinds of authority to an attorney-in-fact. Financially, you can authorize an agent to sign paychecks, withdraw money, file tax returns, buy and sell property such as real estate or automobiles, purchase insurance, manage benefits, make decisions about stocks, and hire professionals for assistance.

A power of attorney is by no means a limitless document when it comes to the powers being granted. A person cannot execute a will or perform a marriage through a power of attorney.

An attorney-in-fact also cannot transfer their powers to another party. A person has the right to decline an appointment as an agent, but they cannot attempt to pass those duties on to another party without the authorization of the principal.

The agent is also prohibited from violating their fiduciary duty to act in the principal’s best interest. This can become a major concern when the power of attorney is granted to a person who is not a family member or trusted friend of a principal.

You should always make sure that the person you are selecting to act as your agent will always be acting in your best interests. People with sizable bank accounts of valuable assets can be at greater risk of having their property mismanaged. 

A power of attorney may be standing or springing. A standing power of attorney takes effect as soon as it is signed, but a springing power of attorney is designed to take effect only when a specific event occurs, such as the incapacitation of the principal.

A power of attorney only authorizes the attorney-in-fact to act during the principal’s lifetime. When the principal dies, they are no longer the legal owners of their property.

After death, the executor named in a person’s will becomes the party authorized to handle their financial matters. Many financial institutions will freeze the accounts of deceased individuals after they die, so attempts to use the power of attorney are usually denied.

It's Decision Time:

Don't leave the important decision about what will happen to your assets and those you care about in your absence to a process that you have no control over. 

Take Control, Plan ahead.  

Call Arthur Shealy, Attorney at Law TODAY to request a Free Consultation.