What is a Financial Power of Attorney?
A Financial Power of Attorney is a document whereby one party, the Principal, grants another party, the “Agent” or “Attorney in Fact”, the power to make decisions governing the property of the Principal.
A financial power of attorney may be expansive granting complete authority to an agent, or it may be very limited and narrow in scope addressing a very specific issue for a very limited time. For example, granting the power for another person to sign a purchase agreement for a property in another state within the next 48 hours. One form is that of a “Durable” financial power of attorney.
While in most cases the Principal retains the power to revoke, or cancel, the financial power of attorney, a durable Financial Power of Attorney often used in estate planning and tax law may not be revoked by the Principal if the Principal is deemed by a court not to be mentally competent to make such a decision in an informed and rational manner, such as if a Principal is suffering from some form of dementia.
Lastly, it’s important to remember that even though a financial power of attorney may have no expiry date, or an expiry date many years into the future, it is unlikely a financial POA more than 3 or 4 years old would be honored by a financial institution. It’s for this reason we recommend meeting with your estate planning attorney every 2-4 years and updating all your estate planning documents. Failure to keep documents current can cause the most well-designed estate plan to fail when needed most.