What’s in a Financial Power of Attorney Agreement?

 

What is a Power of Attorney agreement?

A Power of Attorney (POA) designation gives a person, known as an “agent,” the legal authority to act on another’s behalf in order to manage their affairs. A person who signs a power of attorney agreement authorizing an agent to act for them is known as a “principal.”

Variations of Power of Attorney agreements

Attorney Leigh Beauchamp helps clients with four variations of power of attorney agreements, depending on client needs:

  1. A medical power of attorney agreement for healthcare and medical decision making, also known as a living will, healthcare directive, or designation of patient advocate.

  2. A statutory power of attorney form granting immediate financial power to a client’s chosen agent, helpful for dealing with banks and other financial institutions.

  3. A comprehensive and immediately effective financial power of attorney agreement.

  4. A comprehensive springing financial power of attorney agreement, which only becomes effective upon medical determination that the principal is unable to manage their own affairs.

All power of attorney agreements offered are durable, meaning their legal operations are not affected by the principal becoming incapacitated. In effect, this means that if someone signs a durable power of attorney and later a medical doctor declares that person unable to make decisions for themselves, the power of attorney they signed remains effective and the agent named in said document is able to step in to make decisions on that principal’s behalf.


Why should I sign a Power of Attorney agreement?

A power of attorney is an important tool in planning for potential future incapacity. It allows the principal to carefully consider whom they would like to manage their affairs—often a spouse, child, or other close family member or friend—in the event of the principal developing a condition such as dementia which leaves them unable to effectively manage financial accounts, real property, or complex medical decisions on their own. With a POA, one can carefully consider whom they trust and feel is best equipped to manage their affairs before this reaches a point of urgency.

What are some of the powers given to an agent under a Financial Power of Attorney agreement?

·      Managing the principal’s assets, including bank accounts and real estate

·      Pursuing litigation in relation to the principal’s affairs

·      Managing insurance plans (but NOT taking out life insurance policies on the principal’s life)

·      Preparing and executing tax returns

·      Caring for the principal’s pets

·      Managing the principal’s stocks and bonds

·      Hiring and managing employees such as financial planners to help with the principal’s affairs

·      Disbursing funds for the principal’s support

·      Claiming government benefits, such as social security, for the principal

·      Requesting the principal’s official records

·      Paying the principal’s debts and expenses