Have you designated your power of attorney to your agent? If you have, then it is a good thing, but if you have not done it yet, then you are at mistake. Anyone having valuable income and property should designate their power of attorney to a credible agent by signing a power of attorney form. You may be wondering why you need to do this when you are able to look after everything you own.
Table of Contents
- 1 What is Power of Attorney?
- 2 Power of Attorney Forms
- 3 Why and When Do You Need It?
- 4 Power of Attorney Templates
- 5 What are the Types of Power of Attorney?
- 6 Power of Attorney Samples
- 7 How to Make a Power of Attorney?
- 8 Power of Attorney Examples
Well, then there is no doubt that life is unpredictable and anyone can become incapacitated through an illness or accident to make possible arrangements for their affairs to be handled properly and legally. By giving authority to another person, a power of attorney form lets them act you on your behalf. If you want to know more about the ins and outs of the power of attorney, then you have come to the right place. You will get to know all about the power of attorney, its types, and preparation.
What is Power of Attorney?
Power of attorney is a legal form or document that permits a person to appoint another person to take charge and control the affairs and financial matters which you are incapable to do efficiently. The person who is given this control is called an attorney or an agent while the person who appoints is the principal, holding the ownership of the property.
Furthermore, a power of attorney form will determine what an agent can do on your behalf and what things will restrict them. In addition to this, it also covers the duration for which the agent can act on their behalf. Additionally, it has several types though and you need to choose the one which depends on your requirements.
Power of Attorney Forms
Why and When Do You Need It?
Now that you know what power of attorney is, you should understand that often there are situations that can prevent you to from doing things. For this reason, making a power of attorney will ensure that someone you trust and reliable can take care of and manage the countless financial and practical matters that may arise in case you are unable to perform activities.
No matter how small or big the task it, you may need someone to pay off your bills, make bank deposits or handle your business. A power of attorney is the one of the best options to delegate your work to another person, called as your agent. By signing a power of attorney form, you may not need to worry about the future as there will be someone to look after the activities your loved ones are associated with.
If you have not elected a power of attorney, you should wait no more. Download free power of attorney forms available on our website. However, if you think you do not need one, then you are at mistake as there are many situations that may require you to have a power of attorney, making your life much easier if you become incapacitated. Here are some situations when you might need a power of attorney;
Having a Living Trust
Having a living trust may require you to have a power of attorney for your finances when you are incapable to take care of your financial matters. By dealing with the financial as well practical affairs, the successor trustee (person you give the responsibility for the trust) will ensure you manage your property properly if you are ill or harmed. In addition to that, a successor trustee does not have any legal authority over the property which is not held in the trust; yet, they can only manage the property which you have permitted them to manage.
Spouses do not have the right or any authority over the property by law. Often spouses share the bank account; that is, they have joint accounts. In such a case, spouses are not even permitted to pay off bills or sell stocks. Similarly, when it comes to property, you spouse does not have any right to sell property owned by both of you without your consent.
If they do so, they may be legally charged if you do find out and you file a complaint against them. The spouse’s hands are tied when an incapacitated spouse cannot consent for the sale of property or anything else. Therefore, they may want to sell it anyway which is not right legally. Consequently, giving them the right by signing a power of attorney form in their name can put both of you at relief.
Own Joint Tenancy Property
Joint Tenancy lets several people own a property together. In addition to this, other owners may automatically inherit the person’s share of the property if the owner dies. But when an owner becomes incapacitated, the other owners have a very limited share of property. An example of this could be; if you and your friends a own bank account on a joint tenancy and you become ill, your friends will be legally entitled to use those funds.
The healthiest owner in a joint tenant is permitted to take care of the financial needs of the harmed person by just paying the bills from a joint account. There are several things which can make a joint tenancy property complicated. By signing a power of attorney for an agent to share the joint tenancy property, it can really simplify this case.
Power of Attorney Templates
What are the Types of Power of Attorney?
There are different types of power of attorneys, each having different purposes. Check out the main types of power of attorneys below.
General Power of Attorney
A general power of attorney is normally used to permit an agent to manage affairs for some time period, especially when you are unable to perform them because of any reason, for instance, if you are traveling or are mentally or physically unable to handle your tasks. This is one of the most used forms of a power of attorney, commonly used in estate planning. Following are the powers that are included in a general power of attorney;
- Agents can buy and sell property
- Agents can manage and sell real estate property
- Agents can handle bank transactions related to the property
- Agents can file tax returns
- Agents can enjoy government benefits
- Agents can enter safety deposit boxes
- Agents can settle claims associated to the property
- Agents can enter contracts
- Agents can also purchase life insurance
- Agents can exercise stock rights
The powers mentioned above are given with the general power of attorney while the ones listed below are optional for the agents;
- Agents can make gifts
- Agents can hire professional advisors or assistants
- Agents can transfer revocable living trusts
- Agents can maintain business interests
Medical Power of Attorney
A medical power of attorney is also called a health care power of attorney. It permits agents to make health care decisions on your behalf when you are in a mentally incompetent state, unconscious state or are unable to look after yourself. Signing a medical power of attorney form does not forfeit your right for medical direction to the doctors; it just becomes effective when you do not have the ability to do so.
Mental competence is determined by the doctors in this regard as to what is covered under the medical power of attorney. Naming the doctor in the medical power of attorney form will allow them to make a consideration for you. You can also name two names; the name of the doctor and the other one of the person you rely on, which could be your spouse or friend. However, the other agent’s name who will act on your behalf cannot be written without your doctor’s confirmation.
Living with a medical power of attorney will keep you at relief as your doctor will know the types of medications you may require. Keep this in mind that no one will have the authority to make decisions about your life such as keeping or taking off the life support plug. In such types of cases, it becomes essential to maintain a medical power of attorney form.
Limited Power of Attorney
Limited power of attorney is also called as special power of attorney. This type of power of attorney is designed for agents to only act in specific situations on your behalf. For instance, agents can only be allowed to make decisions when you are unable to maintain or handle your affairs when you are either out of the state or because of some other commitments. Following are the powers associated with the limited power of attorney;
- Agents are able to sell personal property
- Agents can borrow money
- Agents can sell, manage or mortgage real estate
- Agents can collect debts
- Agents are allowed to handle US securities transactions and government issues
- Agents can enter safety deposit boxes
- Agents can handle banking transactions
- Agents can make estate planning decisions, which includes giving gifts
- Agents are permitted to make financial decisions
- Agents can manage business interests
Durable Power of Attorney
Another common type of power of attorney is the durable power of attorney. It can stay in effect for a lifetime, having no time duration until the principal cancels it or dies. All types of power of attorneys mentioned above can be made durable. Whether it is limited, general or a medical power of attorney, your agent is allowed to carry out the things you have permitted them to carry out on your behalf when you are not available.
So, always ensure to pick someone who is trustworthy. Also, one can specify in the durable power of attorney that it would go into effect when the doctor declares their mental instability. Most of the people consider a durable power of attorney. This type of power of attorney permits an agent to have power over the following;
- Agents can manage property
- Agents can pay for the care and support
- Agents can manage the property
- Agents can conduct banking transactions
- Agents can access safety deposits boxes
- Agents can handle legal claims
- Agents can make gifts
- Agents can deal with insurance and retirement benefits
- Agents can exercise the stockholder’s rights
- Agents can prepare and file tax returns
- Agents can collect social security benefits
- Agents can contract for services
- Agents can do any task that is permitted for them to be carried out by law
Springing Power of Attorney
Another option for principal other than the durable power of attorney is springing power of attorney. Though the durable power of attorney is most commonly used in the USA, there are some people who are uncomfortable in doing so. They do not wish to grant the owner or right to someone else while they are healthy and stable. Therefore, they seek for a power of attorney that only takes action upon a specified event, date or condition.
But before you go for this power of attorney, you should understand that there are some potential problems with this document too. Firstly, there is a formal determination of incapacity needed for the springing power of attorney or else, there would be disagreement about the disability. This can cause a delay for the agent to act on your behalf. Secondly, this springing power of attorney is not accepted by all states in the USA.
Power of Attorney Samples
How to Make a Power of Attorney?
Here’s a small guide which will help you in making or arranging your power of attorney.
- Choose the correct type of power of attorney by consulting your lawyer.
- Choose an agent you trust and rely on, consulting their age, health and location.
- To begin writing, mention the name of the parties. Include the responsibilities granted to them and restrict them from the activities you do not wish them to perform.
- Also, you should hire an attorney to review your power of attorney form.
- Get the power of attorney form notarized and show it to the institute you want to get it recognized from.
- Do not forget to make copies and saving your power of attorney form.
Power of Attorney Examples
Now that you know the ins and outs of a power of attorney form, you may understand its importance. If you want to avoid the errors and mistakes or wish to save your time, you can download free power of attorney forms available on our website and simply edit them for your ease. Always remember to hire a lawyer when preparing or editing a power of attorney form. Good luck!