What is a Power of Attorney?
A power of attorney (POA) is a document that states a person has given someone else (usually a close friend or relative) the power to act on his/her behalf. The person to whom this power is given is known as an “agent” or “attorney-in-fact.”
Principal: Person who gives the power of attorney
Agent/Attorney-in-fact: Person who receives it
What are the Agent’s Responsibilities?
It is the agent’s responsibility to keep accurate records of all transactions made on behalf of the principal. The “agent” can be given the power to make decisions in many different areas, including the following:
- Financial matters
- Cashing checks
- Withdrawing money from bank accounts
- Entering into contracts
- Pursuing insurance and legal actions
- Making healthcare decisions
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The laws for creating a power of attorney vary from state to state, and certain guidelines should be followed.
How to Choose an Agent
Although agents agree to manage money and property only for the “principal’s” benefit, they have the freedom to do whatever they wish, which is why it is important to consider the following before giving away a power of attorney:
- Can you trust this person?
- Does the person understand your wishes?
- Is he/she going to do what you ask?
- Will the person contact you when necessary?
- Does the person have appropriate knowledge about the matters involved?
Protecting the Document
The power of attorney document may be challenged and not considered valid. The following are some ways to avoid issues down the line:
- Have the document reviewed by an attorney
- Sign the document with several witnesses present
- Obtain a doctor’s statement confirming the principal’s state of mind
Voiding and Termination
If the document has not been registered, it can be voided in several ways. These include the following:
- A written document by the princiapal revoking the power of attorney
- Following the termination procedure decided in the original POA document
- Destroying the power of attorney document
- The principal’s death
If the document has been registered, it can be terminated by:
- The principal’s divorce from the agent or attorney-in-fact
- The unavailability of an agent or attorney-in-fact
- The death of the principal
Revoking Power Of Attorney
To revoke the POA, the principal must type a statement that includes the following:
- Name and date
- Evidence of sound state of mind
- Wish to revoke the durable power of attorney
- The date on which the original power of attorney was executed
- The person named as the attorney-in-fact
- Principal’s signature
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Before you or your loved one signs any documents, consult an attorney.
How Long Does It Last?
To protect principals and their assets, every power of attorney document has a specified expiration date. Once it expires, the agent will lose the right to handle affairs on behalf of the principal.
It can also be terminated after the death of a principal.
What Cannot Be Done With It?
Agents cannot sign a marriage license or participate in a marriage ceremony in place of the principal.
How Do You Create a Power of Attorney?
Although there are many DIY solutions for creating a power of attorney, most experts consider it vital to hire an experienced attorney.