A power of attorney is a legal document in which you authorize another person (called an agent) or financial institution to act on your behalf to execute certain financial transactions in the event that you’re unable to do so. Transaction might include paying bills, handling insurance claims, selling real estate and filing a tax return.
WMUR’s recent article entitled “Reasons you may need a durable power of attorney” reminds us that this is a cumbersome, time-consuming and potentially expensive process at a time of immediate needs and emotional stress.
Your spouse can probably do the basic bill paying. However, many financial transactions—like the sale of an investment or home—require both spouses’ signatures. You may have some assets in only your name. That means your spouse would have no access to those assets should they be needed to pay the medical expenses due to the disability that’s preventing you from handling your own finances.
Some types of powers of attorney are simply convenience documents that are used for specific transactions or to manage finances for a limited time while a person is out of town. However, there’s also a durable power of attorney for medical care. With this document, you name someone to make medical decisions on your behalf should you be incapacitated. It’s a separate document.
Most commonly, a “durable” financial power of attorney goes into effect upon signing and remains in effect through any incapacity and until your death unless you revoke it. This power of attorney typically allows the agent to perform a broad range of financial transactions on behalf of the person.
Ask an experienced estate planning attorney to draft the power of attorney because to be effective, it needs to meet state law. These laws vary from state to state.
In addition to granting broad powers, the POA must be specific about certain rights granted to the agent. For example, the grantor may give an agent the right to make gifts on behalf of the grantor, the right to complete and sign your tax returns, exercise stock options, or sue a third party.
However, you might want to add some restrictions, such as the conditions in which your assets can be sold.
Your attorney may also retain the document for you pending release, if you should become incapacitated.
To learn more about estate planning in the East Valley, Gilbert, Mesa and Queen Creek, schedule your free consultation with Attorney Jake Carlson by using one of the links above.
Reference: WMUR (May 5, 2022) “Reasons you may need a durable power of attorney”