A Power of Attorney is a legal document in which one person, the “Grantor,” grants another person, the “Agent,” the authority to act on behalf of the Grantor in financial matters. An Agent with power of attorney may, on behalf of the Grantor:
- purchase, sell or lease the Grantor’s real property,
- manage and control partnership interests owned by the Grantor,
- deal with all bonds, stocks, or other investments owned by the Grantor,
- file income taxes and sign the Grantor’s name on the filings,
- deposit and withdraw funds from the Grantor’s financial accounts,
- apply for and receive public and private benefits on behalf of the Grantor,
- generally do anything the Grantor could do if present or able
Why would you need someone to have this much power over your financial affairs? There are two main reasons you might consider granting a power of attorney:
- You will not be personally present when a time-sensitive contract, tax form or any other legal document needs to be signed– but your Agent is able to be there. In this case, a temporary power of attorney would be executed in favor of the Agent to act on your behalf regarding a specific contract or for a specific amount of time.
- You are suddenly incapacitated and unable to care for yourself or make decisions regarding your finances. Sudden incapacitation is something you can only plan ahead for. Once you are incapacitated, you are unable to be a party to a legal document- because you lack legal capacity. To plan ahead for future incapacity, a durable power of attorney could be executed in favor of an Agent you trust to act on your behalf in should the need arise in the future. The family of an incapacitated person without a valid power of attorney may need to file for a conservatorship in the probate court.
Granting a power of attorney is a big decision and selecting your Agent and back-up Agent should be done with the counsel of an experienced attorney. Most estate planning attorneys include a POA in their trust packages because it is an essential element to any comprehensive estate plan. I hope this post helped you learn a bit more about a power of attorney and why you may decide to execute one of your own with the help of legal counsel.