Power of attorney: what does that mean? Generally, this gives broad powers to a person or organization, (an agent or attorney), to act on your behalf. What powers are they?
- Handling financial and business transactions.
- Buying life insurance.
- Settling claims.
- Operating business interests.
- Making gifts.
- Employing professional help.
These different factors make a general power of attorney an effective tool, especially if you’ll be out of the country and need someone to handle certain matters, and if you’re physically or mentally incapable of managing your affairs. Powers of attorney are generally included in estate plans to ensure someone is handling financial matters.
But wait — there are special powers of attorney:
- Health care power of attorney — This grants your agent authority to make medical decisions for you if you are unconscious, mentally incompetent or in some way unable to make decisions on your own. Although it’s not the same thing as a living will, many states allow you to include your preference about being kept on life support. Several states may let you combine parts of the health care power of attorney and living will into an advanced health care directive.
- Durable power of attorney — Suppose you become mentally incompetent due to illness or accident while your power of attorney is in effect. Will the power of attorney remain valid? To safeguard against such problems, you can sign a durable power of attorney. This is a general, special or health care power of attorney with durability provision to keep the current power of attorney in effect. In other words- this allows your attorney to make those important decisions on behalf of yourself- so your family and friends cannot make financial choices, pay the bills, or make the important healthcare decisions.
How do you know the agent you’re choosing has your best interests in mind? They should:
- Keep accurate records of all transactions done on your behalf.
- Provide you with periodic updates to keep you or a third party, (of your choosing), informed.
- Be held responsible only for intentional misconduct, not for unknowingly doing something wrong.
- Be aware that agents are not customarily compensated.
- Know that you may decide to appoint multiple agents to act either jointly or separately in making decisions. This ensures more sound decisions, as they act as checks and balances of one another. But the downside? Multiple agents can disagree, and one person’s schedule can potentially delay important transactions or signings of legal documents.
- Know that you’ve appointed a backup because he or she may become ill, be injured or in some way be unable to serve when the time comes. A successor agent takes over the power of attorney duties from the original agent if needed.
It is important to sign and notarize your original power of attorney document and certify several copies. Banks and other businesses will not allow your agent to act on your behalf unless they receive a certified copy of the power of attorney. You may revoke a power of attorney at any time — notify your agent in writing and retrieve all copies, letting everyone know that your agent’s power of attorney has been revoked.
It may be wise to consult a professional for advice about the powers being granted, to provide counsel on your candidate agent and to make sure your document meets all legal requirements.