Planning Basics – All About your Power of Attorneys

There might be an instance in your life e.g. physical disability that may leave you unable to exercise control in terms of financial decisions. A POA is a solution that remedies this problem. Whether you choose a spouse, adult child or sibling, they will be legally allowed to act in your interest.

You can say that your POA is an agent with the legal right awarded by you to make financial decisions for you when you are incapacitated.

When you sit down with your estate planning lawyer, they will tell you that power of attorney is actually a legal document designating authority to a person of your choosing the responsibility of making your financial decisions.

You sign the documents while you still have your mental faculties. This is why it’s important that one begins estate planning as soon as possible.

While the powers of the POA vary from what a principal chooses, there are some common tasks that they would be executing in their active role. These include but are not limited to the following:

• Paying utility bills
• Signing checks
• Managing real estate
• Completing business transactions
• Filing forms for lending money
• Taking care of legal and/or insurance claims
• Filing tax returns
• Making donations
• And more

Requirements for a POA

The rules and regulations around the Power of attorney document change from state to state. It’s crucial that you choose an estate planning lawyer in New York to explain applicable laws. Generally, the requirements involve a written, witnessed, and notarized POA documents.

If you’re moving states, make sure you find and talk to a local lawyer to make sure you meet the requirements.

The types

POA documents are not all general. There are four distinct types of POAs, differentiated based on the level of power they are granted.

General

First on the radar are general POAs. The document grants them all the rights that you yourself have. What this means is that general POAs can take financial decisions, such as purchase real estate, pay bills, conduct other financial transactions. Their role ends when the principal (that’s you) either becomes incapacitated or passes away.

Limited

As the name suggests, this is a POA with limited powers. For instance, you can choose a limited POA just to sign a deed for your home in a situation where you are not in town or out of the country. The POA’s responsibility ends within a specific time period.

Durable

Durable POAs are the most commonly used types of power of attorneys. They can be general or limited. With general POAs, the authority gets terminated when the principal becomes incapacitated or passes away.

The role of a durable PAO evolved to meet people’s need for an agent that can fulfill financial responsibilities in their incapacity. They remain in effect until the principal’s death unless the document is rescinded while the principal is still healthy.

Springing

Springing POAs are similar to the previous type. However, they are granted authority only for a specific event. For instance, your springing POA will not be effective until you become incapacitated.

They are not necessarily recognized in every state. Make sure you ask an estate planning lawyer for clarification. In New York, your lawyer can help you determine the language that describes the event that triggers their authority.

In most cases, people end up choosing their spouses, siblings or adult children as their POA. What pushes them is their belief that their loved one will have their best interest in mind without any personal biases determining their actions.

In situations where people don’t have a spouse, child or relative to take this responsibility, they should look for a loved one whom they can trust completely. They should be able to stand firm on the principal’s wishes and put their needs first.

If you find yourself struggling to designate an agent for your POA, consider talking to an estate planning lawyer. Their professional and unbiased opinion will help you make the right decision.