Financial Power of Attorney Documents Built for Your Trust
Thinking about a time when you may not be able to make decisions about or handle your own affairs can be scary. No one really wants to think about getting older or having something traumatic happen to them rendering them incapable of sound decisions. It is something we all should think about, even though it might not be pleasant. You just never know what is going to happen and it better to be prepared and never need it than to be caught off guard.
The Ultimate Power of Attorney Guide
A power of attorney is great to protect yourself and your assets just in case the unexpected happens. There are some differences with each of the power of attorney documents. It may not seem like a big deal, but choosing the right one is important. Continue reading this article to find out which one is right for you.
What Is Power of Attorney?
A power of attorney is a document that is powerful and important when determining your planning for your estate and your person. At some point, you may not be able to make decisions for yourself. If you become unable to make decisions about your medical care, your finances, your possessions, someone will have to be responsible for those decisions. If you do not decide who will do that while you are still able to make those decisions, the court may decide for you.
A power of attorney is the document that allows you to put another person, called an agent, in charge of making those decisions for you. There are different power of attorney options, so it is important that you know which one does what. You also must make sure you select the right one(s) for your needs. These documents allow you to have the final say in what happens to you and your estate. The financial power of attorney documents are the most important documents when it comes to decisions that are made about your finances.
While it may seem like just a document, it is a powerful document for you.
What Is the Difference Between a Durable And a General Power of Attorney?
The difference between a durable power of attorney and a general power of attorney is simple, but important.
General Power of Attorney
A general power of attorney is great for general types of situations (we will explain in more detail below) but it ends as soon as you are no longer able to make decisions for yourself. This is a great process to handle many transactions. It is not, however, intended for the end of life decisions or decisions about your medical treatment when you are no longer able to make those decisions.
Durable Power of Attorney
A durable power of attorney continues to be effective even when you are unable to make decisions for yourself. This power of attorney remains in place until you pass away or revoke the power of attorney.
With this power of attorney, if you sip into a coma suddenly, the power of attorney is still in place and your agent can act on your behalf.
There are different laws about the power of attorney that vary from state to state. It is important that you understand the laws specific to the power of attorney in your state.
Are There Different Types of Power of Attorney?
There are different power of attorney documents and each one does something a little different.
General Power of Attorney
It allows someone to handle general items when it comes to your estate, or finances. These can be enacted even if you are able to make decisions but are not able to be physically present. A general power of attorney can handle business, purchase life insurance, settle claims, and handle real estate actions.
You may allow a lawyer to file settlement documents for you when you purchase a house. This power of attorney is limited to a specific transaction. Financial power of attorney documents are typically related to financial matters and can be broad or specific. This is often another name used for a general power of attorney.
Special power of attorney
This power of attorney is specific to an exact transaction. This power of attorney applies to only what is listed and once that transaction is completed, the power of attorney expires. This is usually intended to handle a specific transaction, such as collect debts or sell property.
healthcare power of attorney
It is specific to medical or health decisions. If you are not able to make these decision, a power of attorney is someone you have selected to make them for you. This document is not just for when you are older and not capable of making these decisions. They can also apply to when you may have been in an accident and are not able to make decisions about surgery, medication, and doctors.
What is the Purpose of Financial Power of Attorney?
The agent you select on the financial power of attorney documents should be someone that you trust. The documents allow you to select exactly what financial transitions you would like the agent to handle, but there is still some room for this person to act in an illegal or unintended fashion. This is why it is crucial that you trust the person you select. The document allows you to specify if you want the agent to handle all of your financial decisions or one specific transaction.
The forms may vary slightly from state to state, but the document may list transactions such as buying or selling of real estate or personal possessions. It may include bank transactions, including buying and selling of stocks and bonds. You may allow the agent to make decisions about your business and its operation. Your agent may handle taxes, insurance, estate, and trusts. Your agent may even handle gifts to charities or individuals. As you can see this agent may have access to all of your money and everything you own, and you want to make a careful choice.
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Benefits to a Financial Power of Attorney
There are a few benefits to having financial power of attorney documents. This allows someone to handle financial business for you. A great example is your spouse being able to represent you if you were out of town and could not be available to sign for paperwork. This power of attorney also allows someone to act a your agent to withdraw money or enact some type of business deal. This way you do not have to be present to see a deal go all the way through. It is important to keep in mind that you are legally bound to follow through with whatever an agent agrees to on your behalf.
You also want to make sure that your documents remain current. You can have a power of attorney that is for a specific event, such as the sale of a house. You can also have a power of attorney that does not have an end date. You want to make sure that the document is always up to date. You want be careful with the agent you select and if you have any doubts about this person, you should consider changing your power of attorney. Even if you do not have big events happening in your life, you want to review your documents every couple of years.
1. Who Might Need a Power of Attorney?
While it is a good idea for any adult to have a power of attorney because you just never know what is going to happen. Even if you are still in college, you may want to consider a healthcare power of attorney. This way you can be guaranteed that your family knows what you want if something happens to you. You can be in a serious accident and not be able to make decisions for yourself. This is a good way to ensure they honor your requests.
If you have recently retired, even if you are healthy, you might want to consider having a power of attorney in place, just in case something happens. This way, your wishes will be documented and someone will have to carry them out if you are not able to say. You want to put these documents in place while you still have your mental facilities in place. If you are a new parent, you may want to consider a power of attorney to indicate who you want to care for your child in the event something happens to you. You might want to consider a trust for your child(ren). If you have been diagnosed with some medical condition, you might want to consider a power of attorney. Even if your condition is not a terminal one, you may want to consider putting a power of attorney in place.
2. What is the Best Way to Get Power of Attorney?
Obtaining a power of attorney is fairly simple. All it takes is a few simple steps from you. The state in which you live may add or remove a step, so you want to check the rules for your individual state. Your state may have its own specific power of attorney form. It most likely is not a requirement that you use your state’s form, but it helps the process.
Typically the medical service operations and banks in your state are familiar with the state form and it may be accepted and processed faster. If you do not use the state form, banks may insist on an internal review. It might be less stressful for you to use your state form.
Once you determine which power of attorney is best for your specific situation, select your agent and fill out the appropriate paperwork, including financial power of attorney documents.
There are many websites that can help you find and fill out the paperwork. Once that is complete, your documents must be signed and notarized to make them legally binding.
3. Do I Have Any Rights with a Power of Attorney?
Yes, you still have rights even when you create financial power of attorney documents. You can choose more than one power of attorney, but you must be clear in which one should do what. If you appoint only one power of attorney, you may want to appoint a back up.
When you create a power of attorney, you are giving someone the ability to make decisions on your behalf in specific instances. As long as you are of sound mind, the power of attorney is generally accepted. In some cases, if you are incapacitated, your agent may need to provide medical proof before someone will allow your agent to act.
What if I Change My Mind?
Even once you create a power of attorney, you are not forever bound by it:
You can make changes to a power of attorney.
You can end the power of attorney by revoking it, or canceling it.
You can set an expiration date for any power of attorney that you create.
If you pass away, it automatically ends your power of attorney.
If you become mentally incompetent or incapacitated, and you do not have a durable power of attorney, that can void the power of attorney.
Even though these documents are legal, they can be canceled or revoked.
Conclusion
While a power of attorney may seem like a simple concept, it is an important document when you need it. There are many different documents related to the power of attorney. It is important that you understand your needs so that you can select the proper power of attorney for your exact needs.
It is important to know that the power of attorney will not teach you how to handle money or how to be better with money. After determining the appropriate forms and filling out the forms, you must have them notarized so they are legally bound. It is important that you select the right agent because you are trusting this person to make decisions for you when you are not able. Once you make this decision, you should make sure you review it on a regular basis to make sure that you are still making the right decisions for you and your needs.