On behalf of Sayer Regan & Thayer of Sayer Regan & Thayer, LLP posted on Wednesday, December 9, 2020.
From incapacity to frequent travelers to old age, there are many reasons why one would need to set up a power of attorney (POA). With this in hand, should you be unable to act on your own behalf because of mental or physical incapacity, your agent can make financial decisions to ensure your care and well-being. This legal document would allow them to pay bills, sell assets to cover medical expenses, take care of Medicaid planning, and deal with government or retirement benefits, as well as carry out banking transactions and real estate decisions.
If you’re confused about where to start or how to use the varying types of POAs, the first step is to speak with a qualified attorney skilled in probate, trust and estate administration.
How to Get a Power of Attorney
The first thing to do is decide what the agent will do on your behalf, and under what circumstances. For instance, you may want to set up a POA that only kicks in when you are no longer able to handle your affairs yourself. Keep in mind, some powers of attorney are limited. For example, a POA could merely allow someone to represent you at a real estate closing that is taking place in another city.
Let’s say you have property that’s only in your name. Your spouse will need a power of attorney in order to take legal or financial actions that relate to that property, such as selling it.
POAs differ depending on factors such as when you want the authority to begin and end, how much responsibility you wish to give your agent, and what the laws are in the state in which you reside. No uniform POA exists that is common to every state.
When you use an attorney to draw up a POA, this ensures it is in compliance with state requirements. In order to set up a legally-binding POA, the principal must have sufficient mental capacity at the time the document is being drawn up. This means two things: the principal must fully understand the nature and effect of the document, and if it involves a sick parent who is already incapacitated, you can’t get a power of attorney to act on their behalf.
The POA can be canceled at any time if you simply destroy the original document and prepare a new one, or if you prepare a formal revocation document that informs all concerned parties that the POA is no longer valid.
Four Types of POAs
There are many types of POAs, all with varying levels of responsibility.
This kicks in when signed and continues until you become mentally unable to make your own decisions. You are able to state exactly what authority you are providing your agent. It could be specific, such as the power to sign a deed of sale for your home while taking a trip around the world. This is what is known as a limited power of attorney. Or, you can specify a much broader range of powers, like the ability to access your bank accounts.
A durable POA starts when signed but remains in effect for a lifetime unless you cancel it. This is a popular choice because the agent is able to manage affairs easily and affordably.
This kicks in only when a specific event occurs, such as your incapacitation. A springing power of attorney has to be carefully crafted to prevent problems in identifying exactly when the triggering event happened.
A medical POA, also known as a health care proxy,is both a springing and durable POA. This regards healthcare decisions to be made on your behalf if you are unable to make them on your own.
Choosing someone as your power of attorney is smart, as it ensures you have a plan in place for administering your personal and financial affairs should you become unable to do so.
Contact Sayer, Regan & Thayer LLP
If you have questions about what a power of attorney is and how to use it, contact us toll free at 866-378-5836 or 401-324-9915 for a free consultation.
These materials have been prepared by SRT for informational purposes only and are not intended and should not be construed as legal advice.